PEPSICO INC — Call Transcript 2025

Good morning and welcome to PepsiCo's Q4 and full year 2024 earnings question and answer session. Your lines have been placed on listen only till it's your turn to ask a question. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin. Thank you, Kevin, and good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, February 4th, 2025, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our Q4 2024 earnings release and 2024 Form 10-K, available on PepsiCo.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question, and with that, I will turn it over to the operator for the first question. Thank you. In order to ask a question or make a comment, please press star followed by one-one on your touch-tone phone at any time. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Lauren Lieberman with Barclays. Your line is open. Great, thanks so much. Good morning, everyone. I wanted to talk about Frito, a significant reinvestment in the business that really started over the summer, but we really saw it presumably step up in the Q4, funded by the one-time gain you had. But volumes decelerated sequentially. So just curious if you can talk a little bit more about spending and reinvestment in the Q4 in particular, how much you would describe as kind of tactical versus laying strategic groundwork for next year. Because right now, just optically and super simplistically, the ROI on reinvestment doesn't feel great with volumes kind of taking a step in the wrong direction. Thanks. Good morning, Lauren. It's Jamie. Yeah, look, we're working hard to get the momentum back into the Frito business and, just as importantly, back into the salty and savory category. So that's working for us, working for our customers. So we're going to continue to invest, and what enables us to invest is we're generating productivity. To your point, we did have some help from non-operating gains in the Q4, and the investments are intended to improve the performance in the Q4, but more importantly, to get us off to a good start going into 2025. Lauren, and hi, this is Ramon. A couple of contexts and how we feel about it. We're encouraged by the category. If you look at MULO+, the Circana data, the category is starting to grow again in the last periods of the year, including P1. And that was the number one objective that we had: get the category back into growth, both in volume and hopefully starting to take some, see some pricing price mix, positive price mix. I think we are there. So consumers are back into the category. I wouldn't say a large number, but delivering growth. So that's very positive. From here, we can build on the learnings that we had during the year and what are the best ROI, as you were saying, ROI investments in value for the category. but most importantly, we understand the bigger trends where we can innovate, where we can bring to the category new spaces that will drive additional locations into the category. Moreover, for our own business, the big opportunity we're also addressing is the away-from-home opportunity, which is a blue space, a blue ocean of opportunities for us. And as consumers are being less at home and more away from home, within that's another area of opportunity. so I would say category growth back to good levels. We're starting to see some pricing in the category. The consumer programs and the commercial programs for next year look very strong, addressing innovation spaces that have been unmet at this point, I would say. and then, obviously, for us, away from home is a big opportunity in our food business. We have more of our business in beverages away from home, but for foods is an underdeveloped opportunity. So that's how we're thinking about investments that we put back into the business in Q4. As you said, we reinvested most of the one-time gains in building the infrastructure to capture those opportunities in 2025. Thank you. One moment for our next question. Our next question comes from Bonnie Herzog with Goldman Sachs. Your line is open. Thank you. Good morning, everyone. I actually had a question on your guidance for this year. Your EPS guidance assumes some leverage, but not nearly as much as you've reported in prior years. So just kind of wanted to understand the drivers of this. I assume your productivity savings will remain robust, so should we assume that the level of investments in your businesses are going to ramp a fair amount this year? And if so, could you maybe give us a little bit more of a sense of the types of investments? For instance, Ramon, are you considering more price investments at Frito? And then also, you guided an EPS range versus your typical percentage increase. So is the idea there that you would ultimately like to have more flexibility this year to maybe push more aggressively on investment levels if needed? Thank you. I would say, and Jamie will add to this, the way we're thinking about the year is continuing with the systematic productivity multi-year programs that we've talked to you about, so automation, digitalization, global capability centers, simplifying the company, deduplicating, so there's a lot of, and we feel very strong about that. We are reinvesting into price partitions that we're not participating for Frito. If you think about, there's sub $1, sub $2. There's multiple price partitions where we're not participating. We're rethinking or we're redoing our price pack architecture on single-serve, on multi-packs, and multi-serve to make sure that we attract consumers in, depending on their disposable income during the month, they will be able to access our product across the multiple parts of the portfolio. And then, to your point, we're being cautious. The reality is that the world looks better from the unemployment point of view. There's very low unemployment around the world. There is, I think, better inflation in most of the markets. However, the world is very volatile, if you think from the geopolitical point of view or some of the potential decisions that governments might take going forward. So we think it's prudent for us to give a guidance that reflects all that. And obviously, we can invest in the business and continue to invest for the long term, as we always manage the business, but also give us flexibility to react to potential circumstances that might come our way in the coming months, especially, I would say, the first half of the year. I don't know, Jamie, also in terms of Forex. I'd add we have about a 3.4 point forex hit. Obviously, the dollar's strengthened recently. Peso is the biggest piece of that Forex guide, and then below the line, we're expecting higher net interest expense. Part of that is, as we've rolled over debt, we've issued at slightly higher rates and then higher debt balances with the acquisitions of Siete and the 50% of Sabra that we did not previously own. On top of that, pension expense is going to be up a bit, so where we typically have maybe a little bit of leverage from below the line items, it'll be a bit of a headwind, so you should expect the sector operating profit to grow in excess of what we're guiding on EPS. Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Jefferies. Your line is open. Hey, everybody. Good morning. A couple of questions, I guess, on the restructuring and sort of realignments. I guess the first thing is, I don't know if it was 10 years ago, but there were a lot of conversations around splitting beverage and snack as two different businesses. And I just wonder if these restructurings are maybe a prelude to something bigger down the road, or maybe what's your appetite for that? And then, I guess, in the midst of a restructuring like this, does that also mean that any other M&A is off the table after these two recent deals? Thanks. Okay, Camille. I mean, the reasons for the restructure are multiple, but I'll summarize. The international growth opportunity is very large for us, and we want to have focus between what is a franchise beverage opportunity and what is mainly a food operating unit opportunity. So we're separating those two, make sure that we have category focus, but most importantly, we have a consumer and franchise-facing organization and a consumer and operating-facing organization internationally capturing what is a very large growth opportunity. Now, in the U.S., we have been investing in systems, and we've been investing in data. We've been investing in infrastructure. Now we're ready to capture the benefit of some of those investments in better short-term cost running the business. And there's duplications in how we service the two organizations. So that's an opportunity. We want to continue to have very focused category teams that understand the consumer, innovate, manage the category separately. But also, we see an opportunity to build the future together in a different way. So if you think about infrastructure, if you think about technology investments, if you think about a lot of the big decisions that we have to make for the future of the business, we have an opportunity to do that in a much more harmonized way in the U.S. So those are the three big ideas that I think for the next chapter of the business and our accelerated growth ambitions and margin expansion is the best way to run the organization. Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open. Hey, good morning, guys. Good morning, there. So just looking at Q4 results for you guys across the CPG industry, clearly a pretty muted top-line growth environment in North America. I know you touched on Frito-Lay North America already, but I'd just love to get a bit more granular on how you're specifically managing the business differently in 2025 relative to the back half of last year on both the Frito-Lay and beverage side of the business and areas you're emphasizing more, such as innovation, etc., and just sort of the tweaks in strategy in light of that sustained environment. And also, just can you give us a quick update on performance in Mexico in Q4, somewhat tied into the same vein of a subdued consumer environment? So any update there would be helpful. Thanks. Thank you, Dara. So let me start from the international business remains by far our largest growth opportunity, and we've been investing consistently over the last 10 years. We'll continue to invest to continue to nurture this big opportunity for us to develop our caps and continue to build scale business with high margins. To give you a sense, today, our international business is already almost a $40 billion business, attributed to PepsiCo. So we build the scale, we build the leverage, and that business continues to grow at a very good pace. Now, in North America, we're encouraged by what we're seeing. We're encouraged by, in the beverage business, a continuous improvement of our margin, and that was something that we put as a key objective a few years ago. We see our line of sight to a mid-teens margin in our beverage business. That continues to be an aspiration. Now, I think we have an opportunity to do better on the top line in beverages, and that is the focus for this year: continue to expand the margin, but drive acceleration on the top line behind better price pack, a much more focused innovation against zero, against functional hydration, against some of the more the categories where we are leaders like teas and coffees. And we continue to improve our operational excellence in beverages. So that's the beverage journey, beverage ambition. Again, productivity at the center. I think the teams have been doing a great job in improving operational efficiency across buying, across making, across moving, and everything else. So that's the journey on beverages. In snacks, after five years of very fast growth and gaining almost 200 basis points of share, 2024 has been a slowdown. Our number one priority this year has been stabilizing the category, making sure that consumers come back to the category with good ROI investments. I think we can say that we see that happening. We're seeing the category starting to grow again on volume in the last three months and a little bit of pricing in the category. Frito has a very strong program for 2025, much better price point execution and partitions, as I said earlier in the call, much better innovation. We're moving more of our A&M dollars towards what we call positive choices or permissible offerings for the consumer, a new line of no artificials under Simply, which will have all our brands, more effort on baked, more effort on lightly salted, more efforts on parts of the portfolio where we see consumers moving, a lot of effort on portion control, a lot of effort on single-serve, on multi-packs, and a lot of efforts on availability of our small portions. And then, as I said earlier, away from home continues to be an investment area for Frito, something that was in our strategy. Now we're dialing up the opportunity to have our products available away from home, but not only in the form of a conventional bag of our snacks, but also more elevated experiences in form of ready-to-eat almost solutions or mini-meal solutions. That's why the acquisitions of Siete and Sabra feed our strategy as they give us not only better-for-you snacks, but also the option to participate in meals and mini-meals in a much more intentional way. So those are the kind of the broad strategies. We'll talk more at CAGNY and how we're thinking about all these for the coming years. Thank you. One moment for our next question. Our next question comes from, sorry, Bryan Spillane with Bank of America. Your line is open. Hey, thanks, operator. Good morning, everyone. Hey, Ramon. I'd like to pick up on the comments from the previous question related to Frito and, I guess, the focus on some of the more positive choices. And I guess as we step back, right, and we've all been trying to understand both the Frito share and the category, how much of it is just simply price got ahead of the consumer's wallet? How much of this is now a change in preference, right? Is healthier a more important objective from here? And then I guess the last is just where Frito kind of fits in mini-meals because meals have become more expensive. And is there a migration to, I don't know, a dollar menu relative to a bag of Lay's and a Pepsi? So against those three things, which one is the most important? Specifically, is there something that you're hearing from consumers that is causing a refocus on the more positive choices? It's a great question. It's actually probably the most strategic question. I think when we talk to consumers, value is the number one decision maker, and it's the reason why the category is slowed down in the last 12 months. So we think that addressing value, giving the consumers choices at different price points, different solutions throughout the month, the consumers will be making choices as they're trying to maximize their disposable income. So I think that continues to be the number one focus, and I think we have a much stronger pricing, sizing, and promotional activities that address that with high ROI and maximizing the value of the category. I think there is more awareness from consumers to the food and the drinks that they consume. I think this has been a multi-year evolution of the consumer in the U.S., globally, obviously, as well. Obviously, some parts of the world are more advanced, especially European consumers. But we think there has been more conversations on social and more we've seen some behaviors as well. So that is maybe an acceleration in the US market that we are very well positioned to capture. You think about portion control, probably the number one solution for consumers to stay in our categories is small portions of our favorites, ideally improved favorites with lower sodium and lower fat and no artificial. So portion control of our favorites is a big strategy. There's also consumers that are looking for more functionality, and they're looking for protein in their snacks. They're looking for whole grain in their snacks. They're looking for other benefits, and we're also well positioned. If you think about Sun Chips and how Sun Chips is innovating with whole grain and now legumes, you think about Stacy's with whole grain. If you think about Quaker with protein snacks, if you think about popping and baking and better air frying, lower fat frying options that we're putting on in front of consumers, those are all tools in our portfolio enabled by very capable R&D that we will continue to expand, and the truth is that our partners have been great partners in expanding space for us in stores and giving us the tools to maximize consumer impact, so that will be big in 2025, and we're pivoting a lot of our A&M into those spaces. The third pillar is mini-meals, and this is not only a value-driven decision, but it's a sequence. It's been also a multi-year evolution of the category where more occasions or more calories are being eaten in small meals versus large meals. And I think that is something that will continue as consumers' lifestyle evolves that way. So there, we're participating with all our brands. We're trying to create solutions for consumers in those moments of the day where they're looking for a 200-calorie, 300-calorie solution that takes them over for the next few hours into their next job or whatever they're trying to accomplish. So those are multi-strategies. Now, the same applies to beverages. Beverages' price points are critical. I think, obviously, offering portions that drive that are critical. Better-for-you, so zero and more functional beverages, and we have both in Gatorade and Propel and in the whole zero portfolio. And then also elevated experiences away from home. And we have Pepsi drafts. That is an elevated experience and multiple other solutions that we have on our away-from-home business. So it is a three-pronged strategy. It is across food and beverages, and we feel good about our ability to continue to give consumers what they need as the preferences evolve, obviously, during the coming years. Thank you. One moment for our next question. Our next question comes from Filippo Falorni with Citi. Your line is open. Hi. Good morning, everyone. I want to talk about your low single-digit organic sales guidance for 2025. Can you comment on how much is the international contribution versus the North America expectations? Specifically, in North America, you called out the performance to improve gradually as the year progresses. Can you give us some sense of when you expect North America to improve and kind of what are the key drivers of that improvement in 2025? Thank you. Hi, Filippo. It's Jamie. Yeah. So as we mentioned in the prepared comments, we expect North America's performance to improve gradually as we work through the year. Our guidance of low single digits is in the same neighborhood as our exit rate. Clearly, at this point in the year, with a lot of global uncertainty, I think we've set the top-line guidance to be prudent. And the cause of all the acceleration or the cause of the acceleration in North America is a lot of what Ramon's been sharing previously on the call. So innovation, getting into new spaces, getting into leaning more heavily into away from home. And to be clear, International has been performing very well, and we expect International to continue to be quite resilient and a major contributor to our results in 2025. Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open. Thanks, operator. Good morning, everyone. Hope you're doing well. So Ramon, you mentioned in response to Lauren's question that you're kind of encouraged by some of the trends that you're seeing in salty more recently. And I know throughout this call, you kind of touched on a lot of the things that the company is doing to improve performance around affordability, innovation, etc. But just over the past year, category growth has been choppy, and we've seen kind of these periods of growth kind of ultimately reverse. So I just would be curious, as you look at it today, is there something that you're seeing that's different that gives you greater confidence that the category is on much better footing today as you move into the balance of 2025? Thanks. I think listen, I don't think we can read 2024 in isolation of the previous three years. Otherwise, I think we're missing some of the major impacts on consumer, both lifestyle, move from home into away from home, and disposable income challenges with inflation. So we look at 2024 in the context of the last four years, and we say, "Okay, Frito-Lay, and the category has grown above our long-term expectations." So Frito-Lay grew 8% in the last four years. That's a pretty good compound rate for a company of that scale and that development. So that's positive. And Frito-Lay has, I think, gained almost 200 basis points of share of market. So that is the contextual reality to understand 2024 as a normalization year, inflation going back to normal levels, both on the cost of inputs and the consumer side, and the overall trends in the category. Now, yes, we're encouraged by the fact that we're seeing more occasions coming into the category in the last three years of the three months of the year. And that is encouraging because we see consumers coming back to consume our products, consume the products that are being offered by the category. Now, there is a higher level of consumption in the value segments of the category, but it's also more occasions coming in the premium segments of the category, which also helps us to understand the way to address that opportunity, both with good offerings on the value side, but also innovation and good consumer solutions that consumers are willing to pay more on the premium side. And that's why what I said, we're encouraged. I think our commercial plans address the opportunities both ends of the category and also trying to be very cautious and always having ROI at the center of our decisions, not only for PepsiCo, but for the full category, which we think we're guardians of this category for the long term. And that's why we're making some of the decisions we're making. Thank you. One moment for our next question. Our next question comes from Steve Powers with Deutsche Bank. Your line is open. Hey, thanks. Good morning. So I don't want to beat a dead horse, but I just wanted to delve a little further into the topic of Frito investment and specifically the topic of pricing and value because I appreciate the comments you made so far, Ramon, but I guess I'm trying to put a little finer point on it because it's the one area where I guess you could argue you haven't really yet made clear and considered investments, just evidenced by the fact that pricing in Frito is still positive this quarter despite tactical initiatives you discussed coming into the quarter. So the comments you've made today, Ramon, signal a change on that front such that pricing in Frito could potentially start to run negative as we start 2025. I certainly understand the risks and sensitivities of walking back pricing, but on the flip side, I guess the question would be, how would you think about the risks of not investing more in price to re-energize volume, just given that it's been, I guess, 18 months or so where we've seen category volumes and volumes in your portfolio extend their declines and fall short of expectations? So just I think I'm hearing a little bit more certain in this, but I just want to. [crosstalk] No, I wouldn't assume that we're going to have negative pricing. I don't think that's our strategy. What I'm saying is we're going to have much more surgical offerings to consumers, especially around price partitions, which I think we can do pricing sizing in a way that we give consumers optionality without diluting the pricing of our business or the category. For example, if you think about the multi-bag business, we will be offering lower counts. We'll be offering eight counts, and we'll be offering 15 counts and 18 counts and 20 counts. We'll be offering the consumer multiple choices so that the consumer can begin of the month, they might go for an 18-count, and end of the month, they might take a six-count, eight-count, depending on their budget availability. That's one strategy. The same with the single-serve. We've always had the two-for-a-dollar option for limited channels. Now we're going to have a sub-$2 option that we didn't have. We'll have multiple partitions for different occasions. And obviously, this is the DSD system allows us to have distribution of the different price packs for the occasions that matter for that particular customer or point of sale throughout the year. So those are capabilities that we have in place. Now we would have the offerings. We'll have the executions, and we'll have the partnership with our customers to try to continue to drive value for the consumer and for our partners and for ourselves. I don't think we will have negative pricing. We'll have a much more surgical price pack strategy and execution strategy that we think will drive growth for the category, given where the consumer is in their disposable income evolution after the high inflation years that we just crossed. Thank you. One moment for our next question. Our next question comes from Michael Lavery with Piper Sandler. Your line is open. Thank you. Good morning. Just want to come back to Frito, really not as much the pricing piece, but some of the other spending. At the end of Lauren's question, you were saying you reinvested most of the one-time gains in infrastructure. Just want to maybe understand a little bit better what that is. I mean, I think the optics she pointed out are a little funny, but if we understand that better, I think that's helpful. Just a little bit related, you said that the percentage of sales for advertising and marketing went up in 2024. Can you maybe touch on what your expectations are for 2025 for that? I'll start with the A&M. I'd expect our A&M to be pretty consistent as percent of sales in 2025. Investments and how we reinvested them. I think going back to the investments, I think we continue to think about our long-term portfolio evolution. So continue to invest more on the future platforms that we're trying to create, whether it's portion-controlled platforms, whether it's permissible platforms, whether it's away-from-home platforms. All of those require investments upfront, especially away-from-home requires some investments to be able to capture new channels and new opportunities. The same with some of the new platforms that we have to invest to get it off the ground. That's why my comment on Q4 investing on those platforms. But again, we're trying to run the business for the long term, trying to establish good options for the consumer in all the different price partitions, move the portfolio to where we think are the new pockets of demand. Again, lower fat products, lower sodium products, better ingredients, now legumes and rice and some other ingredients, giving consumers higher protein, all the different functionalities that consumers are looking for as they enjoy tasting snacks, and then again, the away-from-home opportunity being much bigger, both with mini meals and some ready-to-eat solutions that our brands can participate. We're seeing high demand and that will require investments to be able to capture for the long term. Thank you. One moment for our next question. Our next question comes from Drew Levine with JPMorgan. Your line is open. Can you hear me? Yes. Hi, Drew. Thanks for taking the question. So, I think this is the Q1 in a while where energy wasn't specifically mentioned in the prepared remarks. So, wondering any change in view of the category or PepsiCo's platform in the category. And, I know the company has previously said you feel good about the service levels and execution, but maybe any color on what the company has planned from a planning or execution perspective to drive growth in that part of the portfolio or if there's anything that the partnership could be doing differently or better from your perspective. Thank you. Thank you. We think we continue to see energy as a fundamental part of our beverage growth strategy in the U.S. There's a demand for energy throughout the day, and I think we have a portfolio that offers that both with our brands and some of the brands that we distribute, and we're servicing our consumers and our customers with, I think, full end-to-end solutions, so there's no mention because there's nothing special to mention. Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open. Hey, guys. This is Greg on for Robert. I was just wondering if you could please talk a bit about the PB&A pricing strategy for 2025 and then a bit more about higher thinking of promo in that segment. And then as a quick other follow-up, maybe just touch on the incrementality of Baja Blast and just how you guys are thinking about the Mountain Dew franchise. Thank you. Great. So listen, Baja Blast is a big part of our strategy to make Mountain Dew a bigger contributor to our growth in beverages. It's a large franchise. It's almost $1 billion already between our away-from-home and our retail business, so in the neighborhood of $1 billion. We see it is incremental in driving penetration for Mountain Dew, especially with Gen Zs and especially in parts of the country where our core Mountain Dew is less developed. So we see a very good incrementality for us, and we will continue to invest in Baja Blast. It's one of our bets for the year. It's continuing the development of Baja Blast. We'll have it for Super Bowl, and there's a whole program throughout the year to continue to develop this platform. I think it's sustainable. It's incremental. It brings new consumers into the franchise. So that's regarding Baja Blast. Regarding the pricing strategy, I think there's very disciplined category pricing, both through price pack and through a channel mix. And we'll continue to work on that direction to create value for our partners and for our consumers, giving them the best choices in price packs and promotional offers that create category value and category profitability for our partners and ourselves. Thank you. One moment for our next question. Our next question comes from Robert Moskow with TD Cowen. Your line is open. Hi. Thank you for the question. I was curious when you went through the list of factors impacting the slowdown in salty snacks, there's no mention of increased GLP usage. And there's a pretty detailed study by Numerator Cornell showing that salty snacks was a category that was probably most impacted by GLP usage. Would you agree with that assessment, or do you think it overstates the impact? And then secondly, protein drinks is probably the fastest-growing segment of the drinks market. Would you have any desire to go become more aggressive in that category given all the growth around it? Thanks. That's great. Listen, on the protein beverages, for sure, we're trying to participate in that with a sense of urgency. We're trying to participate in general in the functionality evolution of the beverage category, both from the functional hydration point of view and there with Gatorade and Propel, and we see the opportunity to continue to create more value, both in terms of hydration by hydration plus protein as well in that space, but yes, in terms of protein, both through Muscle Milk and some other innovations, we're looking at participating in that category, which, as you were saying, it is growing faster than total LRB. So for sure, that is an opportunity that we're. Now, on salty, listen, I think we continue to study GLP, obviously, with a lot of detail. At this point, we see that because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact in our business and in our category at this point. However, as I said earlier, I think there's a higher level of awareness in general of American consumers towards health and wellness. And this is driven by potentially all the conversation around obesity drugs, but also other conversations that are happening around the space on health and wellness. So I think, yes, there is a health and wellness higher level of awareness by consumers, and that's driving some behaviors that we're addressing through the strategies that I talked earlier, the most important being portion control. I think portion control is a highly strategic strategy that we've been implementing for many years, but also long-term evolution of our portfolio with lower sodium, lower fat, lower sugar, positive ingredients, plant-based protein, whole grains. All those are kind of strategic adjustments and evolution of our portfolio that we've been making for many years. We're accelerating to be able to offer consumers all different options for the multiple locations that they interact with our category, so again, we haven't seen a direct impact of GLP, but we're seeing more conversation in social media about health and wellness in general, and obviously, that's impacting consumption of foods and consumption of beverages, and we're very well positioned with our broad portfolio to cater to all these new realities, and this is not new. This is something that we've been working on for many, many years. This is a sequential evolution of the consumer that both through innovation and through M&A, we've been addressing. I think we have a very broad portfolio. If you think about the acquisitions of Siete or of Sabra, they're in that context, and they give us both the opportunity to innovate, but also to enter new spaces like meals where we needed more platforms to take advantage of them. Just to add, I think the protein opportunity is beyond protein beverages. So if you look at the Quaker today, we've got a number of offerings that are high protein in the breakfast occasion, and I think there's a lot more opportunity to expand that. Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo. Your line is open. Hi. Thank you. So number one, just on Europe, this has been a segment that has actually seen kind of successfully driven an improvement of volume just even as pricing has normalized. What's specific about what's going on in Europe that has allowed you to see that positive balance of delivery over the course of this year? And do you think this performance is sustainable going into next year? And then just connected, I think there was some view that international profit strength could fund some of the investments in North America. Would you continue to have that view given what we're seeing in the currency environment? So just the concept of international still being able to give you that profit lift so as to fund some of the things that you want to do in North America. So thanks for those two. Great. So international continues to be our largest value creation opportunity, both in the top line and margin expansion. If you look at the margin expansion of international in the last couple of years, it's very remarkable. And I wouldn't say that international will fund the U.S., but as we manage the company in its totality, obviously, international now is a great source of top line, is a great source of profit, and it gives us flexibility to be much more flexible, I guess, in how we allocate resources and grow the overall business. With regards to Europe, it's just a, I would say, consistent strategy by our teams. I think the teams have done a great job in being very balanced in simplifying the business, extracting unnecessary costs from the P&L, and reinvesting those in growth in platforms that have been very good for us long-term, zero sugar beverages, lower sodium and lower fat snacks, and executing better in terms of availability, affordability, and entering new spaces like away from home. So they've been executing very well this strategy of the business, starting, I would say, from a very intentional reduction of cost to reinvest in top line. And in a difficult context like the European markets with large retailers, they've done a great job. And yes, within that, this is sustainable. Within this, we'll continue in this year and coming years. The opportunities to grow per caps in Europe are still very large, and we have very good teams in the markets and very good strategies to deploy our capabilities against the market. Thank you. One moment for our next question. Our last question comes from Kevin Grundy with BNP Paribas. Your line is open. Great. Thanks. Good morning, everyone. Ramon, I wanted to take a step back here and give you the opportunity to perhaps level set on the company's longer-term organic sales guidance of 4% to 6%. So not asking you to be redundant in any way, but pulling together a lot of themes on the call. It seems like you see issues in the snacks business as more transitory or cyclical as opposed to secular. You sound confident on the strength of the business outside the U.S., but perhaps maybe cautiously optimistic. You have the right plan in place to return snacks to growth. Time will tell. But as we sit here today, can you maybe comment on your level of confidence? These are indeed transitory issues facing the business, and that 4% to 6% is still the right growth rate for your current portfolio on an intermediate-term basis.Thank you. Thank you. Great question. And I think, obviously, we see our long-term growth of the business in those levels, 4%-6%, and we're obviously going to try to go for the upper end of the long-term guidance. Again, very high growth in international. We're very confident that our North America business will accelerate this year. We're very confident in our plans and our long-term. And we see opportunities, especially away from home, as billions of occasions on a daily basis that we need to go and capture with much more intentional products and consumer-facing go-to-market. So those are big opportunities. We remain very committed, and we also remain very committed to translate that growth into a high single-digit EPS. And if you look at our last five years, we've been delivering above our long-term guidance, both in top line and bottom line, and we don't see any reason why we should not continue to deliver at those high levels if you take the next five years in context. So thank you very much. This has been a good conversation, and I really appreciate your questions. Thank you for staying invested in our business. We look forward to the meeting in CAGNY and also hope that you guys enjoy our products during this weekend Super Bowl game. So thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker 19: Good morning and welcome to PepsiCo's Q4 and full year 2024 earnings question and answer session. Your lines have been placed on listen only till it's your turn to ask a question. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin. Good morning and welcome to PepsiCo's Q4 and full year 2024 earnings question and answer session. good morning and welcome to pepsico's q4 and full year 2024 earnings question and answer session Your lines have been placed on listen only till it's your turn to ask a question. your lines have been placed on listen only till it's your turn to ask a question Today's call is being recorded and will be archived at www.pepsico.com. today's call is being recorded and will be archived at www.pepsico.com It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. it is now my pleasure to introduce mr ravi pamnani senior vice president of investor relations Mr. Pamnani, you may begin. mr pamnani you may begin

Speaker 13: Thank you, Kevin, and good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, February 4th, 2025, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our Q4 2024 earnings release and 2024 Form 10-K, available on PepsiCo.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Thank you, Kevin, and good morning, everyone. thank you kevin and good morning everyone I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. i hope everyone has had a chance this morning to review our press release and prepared remarks both of which are available on our website Before we begin, please take note of our cautionary statement. before we begin please take note of our cautionary statement We may make forward-looking statements on today's call, including about our business plans, guidance, and outlook. we may make forward-looking statements on today's call including about our business plans guidance and outlook Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, February 4th, 2025, and we are under no obligation to update. forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today february 4th 2025 and we are under no obligation to update When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. when discussing our results we refer to non-gaap measures which exclude certain items from reported results Please refer to our Q4 2024 earnings release and 2024 Form 10-K, available on PepsiCo.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. please refer to our q4 2024 earnings release and 2024 form 10-k available on pepsico.com for definitions and reconciliations of non-gaap measures and additional information regarding our results including a discussion of factors that could cause actual results to materially differ from forward-looking statements Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question, and with that, I will turn it over to the operator for the first question. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. joining me today are pepsico's chairman and ceo ramon laguarta and pepsico's executive vice president and cfo jamie caulfield We ask that you please limit yourself to one question, and with that, I will turn it over to the operator for the first question. we ask that you please limit yourself to one question and with that i will turn it over to the operator for the first question

Speaker 19: Thank you. In order to ask a question or make a comment, please press star followed by one-one on your touch-tone phone at any time. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Lauren Lieberman with Barclays. Your line is open. Thank you. thank you In order to ask a question or make a comment, please press star followed by one-one on your touch-tone phone at any time. in order to ask a question or make a comment please press star followed by one-one on your touch-tone phone at any time We'll pause for a moment while we compile our Q&A roster. we'll pause for a moment while we compile our q&a roster Our first question comes from Lauren Lieberman with Barclays. our first question comes from lauren lieberman with barclays Your line is open. your line is open

Speaker 16: Great, thanks so much. Good morning, everyone. I wanted to talk about Frito, a significant reinvestment in the business that really started over the summer, but we really saw it presumably step up in the Q4, funded by the one-time gain you had. But volumes decelerated sequentially. So just curious if you can talk a little bit more about spending and reinvestment in the Q4 in particular, how much you would describe as kind of tactical versus laying strategic groundwork for next year. Because right now, just optically and super simplistically, the ROI on reinvestment doesn't feel great with volumes kind of taking a step in the wrong direction. Thanks. Great, thanks so much. great thanks so much Good morning, everyone. good morning everyone I wanted to talk about Frito, a significant reinvestment in the business that really started over the summer, but we really saw it presumably step up in the Q4, funded by the one-time gain you had. i wanted to talk about frito a significant reinvestment in the business that really started over the summer but we really saw it presumably step up in the q4 funded by the one-time gain you had But volumes decelerated sequentially. but volumes decelerated sequentially So just curious if you can talk a little bit more about spending and reinvestment in the Q4 in particular, how much you would describe as kind of tactical versus laying strategic groundwork for next year. so just curious if you can talk a little bit more about spending and reinvestment in the q4 in particular how much you would describe as kind of tactical versus laying strategic groundwork for next year Because right now, just optically and super simplistically, the ROI on reinvestment doesn't feel great with volumes kind of taking a step in the wrong direction. because right now just optically and super simplistically the roi on reinvestment doesn't feel great with volumes kind of taking a step in the wrong direction Thanks. thanks

Speaker 8: Good morning, Lauren. It's Jamie. Yeah, look, we're working hard to get the momentum back into the Frito business and, just as importantly, back into the salty and savory category. So that's working for us, working for our customers. So we're going to continue to invest, and what enables us to invest is we're generating productivity. To your point, we did have some help from non-operating gains in the Q4, and the investments are intended to improve the performance in the Q4, but more importantly, to get us off to a good start going into 2025. Good morning, Lauren. good morning lauren It's Jamie. it's jamie Yeah, look, we're working hard to get the momentum back into the Frito business and, just as importantly, back into the salty and savory category. yeah look we're working hard to get the momentum back into the frito business and just as importantly back into the salty and savory category So that's working for us, working for our customers. so that's working for us working for our customers So we're going to continue to invest, and what enables us to invest is we're generating productivity. so we're going to continue to invest and what enables us to invest is we're generating productivity To your point, we did have some help from non-operating gains in the Q4, and the investments are intended to improve the performance in the Q4, but more importantly, to get us off to a good start going into 2025. to your point we did have some help from non-operating gains in the q4 and the investments are intended to improve the performance in the q4 but more importantly to get us off to a good start going into 2025

Speaker 2: Lauren, and hi, this is Ramon. A couple of contexts and how we feel about it. We're encouraged by the category. If you look at MULO+, the Circana data, the category is starting to grow again in the last periods of the year, including P1. And that was the number one objective that we had: get the category back into growth, both in volume and hopefully starting to take some, see some pricing price mix, positive price mix. I think we are there. So consumers are back into the category. I wouldn't say a large number, but delivering growth. So that's very positive. From here, we can build on the learnings that we had during the year and what are the best ROI, as you were saying, ROI investments in value for the category. Lauren, and hi, this is Ramon. lauren and hi this is ramon A couple of contexts and how we feel about it. a couple of contexts and how we feel about it We're encouraged by the category. we're encouraged by the category If you look at MULO+, the Circana data, the category is starting to grow again in the last periods of the year, including P1. if you look at mulo+ the circana data the category is starting to grow again in the last periods of the year including p1 And that was the number one objective that we had: get the category back into growth, both in volume and hopefully starting to take some, see some pricing price mix, positive price mix. and that was the number one objective that we had get the category back into growth both in volume and hopefully starting to take some see some pricing price mix positive price mix I think we are there. i think we are there So consumers are back into the category. so consumers are back into the category I wouldn't say a large number, but delivering growth. i wouldn't say a large number but delivering growth So that's very positive. so that's very positive From here, we can build on the learnings that we had during the year and what are the best ROI, as you were saying, ROI investments in value for the category. from here we can build on the learnings that we had during the year and what are the best roi as you were saying roi investments in value for the category but most importantly, we understand the bigger trends where we can innovate, where we can bring to the category new spaces that will drive additional locations into the category. Moreover, for our own business, the big opportunity we're also addressing is the away-from-home opportunity, which is a blue space, a blue ocean of opportunities for us. And as consumers are being less at home and more away from home, within that's another area of opportunity. so I would say category growth back to good levels. We're starting to see some pricing in the category. The consumer programs and the commercial programs for next year look very strong, addressing innovation spaces that have been unmet at this point, I would say. and then, obviously, for us, away from home is a big opportunity in our food business. but most importantly, we understand the bigger trends where we can innovate, where we can bring to the category new spaces that will drive additional locations into the category. but most importantly we understand the bigger trends where we can innovate where we can bring to the category new spaces that will drive additional locations into the category Moreover, for our own business, the big opportunity we're also addressing is the away-from-home opportunity, which is a blue space, a blue ocean of opportunities for us. moreover for our own business the big opportunity we're also addressing is the away-from-home opportunity which is a blue space a blue ocean of opportunities for us And as consumers are being less at home and more away from home, within that's another area of opportunity. so I would say category growth back to good levels. and as consumers are being less at home and more away from home within that's another area of opportunity so i would say category growth back to good levels We're starting to see some pricing in the category. we're starting to see some pricing in the category The consumer programs and the commercial programs for next year look very strong, addressing innovation spaces that have been unmet at this point, I would say. and then, obviously, for us, away from home is a big opportunity in our food business. the consumer programs and the commercial programs for next year look very strong addressing innovation spaces that have been unmet at this point i would say and then obviously for us away from home is a big opportunity in our food business We have more of our business in beverages away from home, but for foods is an underdeveloped opportunity. So that's how we're thinking about investments that we put back into the business in Q4. As you said, we reinvested most of the one-time gains in building the infrastructure to capture those opportunities in 2025. We have more of our business in beverages away from home, but for foods is an underdeveloped opportunity. we have more of our business in beverages away from home but for foods is an underdeveloped opportunity So that's how we're thinking about investments that we put back into the business in Q4. so that's how we're thinking about investments that we put back into the business in q4 As you said, we reinvested most of the one-time gains in building the infrastructure to capture those opportunities in 2025. as you said we reinvested most of the one-time gains in building the infrastructure to capture those opportunities in 2025

Speaker 19: Thank you. One moment for our next question. Our next question comes from Bonnie Herzog with Goldman Sachs. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Bonnie Herzog with Goldman Sachs. our next question comes from bonnie herzog with goldman sachs Your line is open. your line is open

Speaker 17: Thank you. Good morning, everyone. I actually had a question on your guidance for this year. Your EPS guidance assumes some leverage, but not nearly as much as you've reported in prior years. So just kind of wanted to understand the drivers of this. I assume your productivity savings will remain robust, so should we assume that the level of investments in your businesses are going to ramp a fair amount this year? And if so, could you maybe give us a little bit more of a sense of the types of investments? For instance, Ramon, are you considering more price investments at Frito? And then also, you guided an EPS range versus your typical percentage increase. So is the idea there that you would ultimately like to have more flexibility this year to maybe push more aggressively on investment levels if needed? Thank you. Thank you. thank you Good morning, everyone. good morning everyone I actually had a question on your guidance for this year. i actually had a question on your guidance for this year Your EPS guidance assumes some leverage, but not nearly as much as you've reported in prior years. your eps guidance assumes some leverage but not nearly as much as you've reported in prior years So just kind of wanted to understand the drivers of this. so just kind of wanted to understand the drivers of this I assume your productivity savings will remain robust, so should we assume that the level of investments in your businesses are going to ramp a fair amount this year? i assume your productivity savings will remain robust so should we assume that the level of investments in your businesses are going to ramp a fair amount this year And if so, could you maybe give us a little bit more of a sense of the types of investments? and if so could you maybe give us a little bit more of a sense of the types of investments For instance, Ramon, are you considering more price investments at Frito? for instance ramon are you considering more price investments at frito And then also, you guided an EPS range versus your typical percentage increase. and then also you guided an eps range versus your typical percentage increase So is the idea there that you would ultimately like to have more flexibility this year to maybe push more aggressively on investment levels if needed? so is the idea there that you would ultimately like to have more flexibility this year to maybe push more aggressively on investment levels if needed Thank you. thank you

Speaker 2: I would say, and Jamie will add to this, the way we're thinking about the year is continuing with the systematic productivity multi-year programs that we've talked to you about, so automation, digitalization, global capability centers, simplifying the company, deduplicating, so there's a lot of, and we feel very strong about that. We are reinvesting into price partitions that we're not participating for Frito. If you think about, there's sub $1, sub $2. There's multiple price partitions where we're not participating. We're rethinking or we're redoing our price pack architecture on single-serve, on multi-packs, and multi-serve to make sure that we attract consumers in, depending on their disposable income during the month, they will be able to access our product across the multiple parts of the portfolio. And then, to your point, we're being cautious. The reality is that the world looks better from the unemployment point of view. I would say, and Jamie will add to this, the way we're thinking about the year is continuing with the systematic productivity multi-year programs that we've talked to you about, so automation, digitalization, global capability centers, simplifying the company, deduplicating, so there's a lot of, and we feel very strong about that. i would say and jamie will add to this the way we're thinking about the year is continuing with the systematic productivity multi-year programs that we've talked to you about so automation digitalization global capability centers simplifying the company deduplicating so there's a lot of and we feel very strong about that We are reinvesting into price partitions that we're not participating for Frito. we are reinvesting into price partitions that we're not participating for frito If you think about, there's sub $1, sub $2. if you think about there's sub $1 sub $2 There's multiple price partitions where we're not participating. there's multiple price partitions where we're not participating We're rethinking or we're redoing our price pack architecture on single-serve, on multi-packs, and multi-serve to make sure that we attract consumers in, depending on their disposable income during the month, they will be able to access our product across the multiple parts of the portfolio. we're rethinking or we're redoing our price pack architecture on single-serve on multi-packs and multi-serve to make sure that we attract consumers in depending on their disposable income during the month they will be able to access our product across the multiple parts of the portfolio And then, to your point, we're being cautious. and then to your point we're being cautious The reality is that the world looks better from the unemployment point of view. the reality is that the world looks better from the unemployment point of view There's very low unemployment around the world. There is, I think, better inflation in most of the markets. However, the world is very volatile, if you think from the geopolitical point of view or some of the potential decisions that governments might take going forward. So we think it's prudent for us to give a guidance that reflects all that. And obviously, we can invest in the business and continue to invest for the long term, as we always manage the business, but also give us flexibility to react to potential circumstances that might come our way in the coming months, especially, I would say, the first half of the year. I don't know, Jamie, also in terms of Forex. There's very low unemployment around the world. there's very low unemployment around the world There is, I think, better inflation in most of the markets. there is i think better inflation in most of the markets However, the world is very volatile, if you think from the geopolitical point of view or some of the potential decisions that governments might take going forward. however the world is very volatile if you think from the geopolitical point of view or some of the potential decisions that governments might take going forward So we think it's prudent for us to give a guidance that reflects all that. so we think it's prudent for us to give a guidance that reflects all that And obviously, we can invest in the business and continue to invest for the long term, as we always manage the business, but also give us flexibility to react to potential circumstances that might come our way in the coming months, especially, I would say, the first half of the year. and obviously we can invest in the business and continue to invest for the long term as we always manage the business but also give us flexibility to react to potential circumstances that might come our way in the coming months especially i would say the first half of the year I don't know, Jamie, also in terms of Forex . i don't know jamie also in terms of forex

Speaker 8: I'd add we have about a 3.4 point forex hit. Obviously, the dollar's strengthened recently. Peso is the biggest piece of that Forex guide, and then below the line, we're expecting higher net interest expense. Part of that is, as we've rolled over debt, we've issued at slightly higher rates and then higher debt balances with the acquisitions of Siete and the 50% of Sabra that we did not previously own. On top of that, pension expense is going to be up a bit, so where we typically have maybe a little bit of leverage from below the line items, it'll be a bit of a headwind, so you should expect the sector operating profit to grow in excess of what we're guiding on EPS. I'd add we have about a 3.4 point forex hit. i'd add we have about a 3.4 point forex hit Obviously, the dollar's strengthened recently. obviously the dollar's strengthened recently Peso is the biggest piece of that Forex guide, and then below the line, we're expecting higher net interest expense. peso is the biggest piece of that forex guide and then below the line we're expecting higher net interest expense Part of that is, as we've rolled over debt, we've issued at slightly higher rates and then higher debt balances with the acquisitions of Siete and the 50% of Sabra that we did not previously own. part of that is as we've rolled over debt we've issued at slightly higher rates and then higher debt balances with the acquisitions of siete and the 50% of sabra that we did not previously own On top of that, pension expense is going to be up a bit, so where we typically have maybe a little bit of leverage from below the line items, it'll be a bit of a headwind, so you should expect the sector operating profit to grow in excess of what we're guiding on EPS. on top of that pension expense is going to be up a bit so where we typically have maybe a little bit of leverage from below the line items it'll be a bit of a headwind so you should expect the sector operating profit to grow in excess of what we're guiding on eps

Speaker 19: Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Jefferies. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Kaumil Gajrawala with Jefferies. our next question comes from kaumil gajrawala with jefferies Your line is open. your line is open

Speaker 1: Hey, everybody. Good morning. A couple of questions, I guess, on the restructuring and sort of realignments. I guess the first thing is, I don't know if it was 10 years ago, but there were a lot of conversations around splitting beverage and snack as two different businesses. And I just wonder if these restructurings are maybe a prelude to something bigger down the road, or maybe what's your appetite for that? And then, I guess, in the midst of a restructuring like this, does that also mean that any other M&A is off the table after these two recent deals? Thanks. Hey, everybody. hey everybody Good morning. good morning A couple of questions, I guess, on the restructuring and sort of realignments. a couple of questions i guess on the restructuring and sort of realignments I guess the first thing is, I don't know if it was 10 years ago, but there were a lot of conversations around splitting beverage and snack as two different businesses. i guess the first thing is i don't know if it was 10 years ago but there were a lot of conversations around splitting beverage and snack as two different businesses And I just wonder if these restructurings are maybe a prelude to something bigger down the road, or maybe what's your appetite for that? and i just wonder if these restructurings are maybe a prelude to something bigger down the road or maybe what's your appetite for that And then, I guess, in the midst of a restructuring like this, does that also mean that any other M&A is off the table after these two recent deals? and then i guess in the midst of a restructuring like this does that also mean that any other m&a is off the table after these two recent deals Thanks. thanks

Speaker 2: Okay, Camille. I mean, the reasons for the restructure are multiple, but I'll summarize. The international growth opportunity is very large for us, and we want to have focus between what is a franchise beverage opportunity and what is mainly a food operating unit opportunity. So we're separating those two, make sure that we have category focus, but most importantly, we have a consumer and franchise-facing organization and a consumer and operating-facing organization internationally capturing what is a very large growth opportunity. Now, in the U.S., we have been investing in systems, and we've been investing in data. We've been investing in infrastructure. Now we're ready to capture the benefit of some of those investments in better short-term cost running the business. And there's duplications in how we service the two organizations. So that's an opportunity. Okay, Camille. okay camille I mean, the reasons for the restructure are multiple, but I'll summarize. i mean the reasons for the restructure are multiple but i'll summarize The international growth opportunity is very large for us, and we want to have focus between what is a franchise beverage opportunity and what is mainly a food operating unit opportunity. the international growth opportunity is very large for us and we want to have focus between what is a franchise beverage opportunity and what is mainly a food operating unit opportunity So we're separating those two, make sure that we have category focus, but most importantly, we have a consumer and franchise-facing organization and a consumer and operating-facing organization internationally capturing what is a very large growth opportunity. so we're separating those two make sure that we have category focus but most importantly we have a consumer and franchise-facing organization and a consumer and operating-facing organization internationally capturing what is a very large growth opportunity Now, in the U.S., we have been investing in systems, and we've been investing in data. now in the u.s we have been investing in systems and we've been investing in data We've been investing in infrastructure. we've been investing in infrastructure Now we're ready to capture the benefit of some of those investments in better short-term cost running the business. now we're ready to capture the benefit of some of those investments in better short-term cost running the business And there's duplications in how we service the two organizations. and there's duplications in how we service the two organizations So that's an opportunity. so that's an opportunity We want to continue to have very focused category teams that understand the consumer, innovate, manage the category separately. But also, we see an opportunity to build the future together in a different way. So if you think about infrastructure, if you think about technology investments, if you think about a lot of the big decisions that we have to make for the future of the business, we have an opportunity to do that in a much more harmonized way in the U.S. So those are the three big ideas that I think for the next chapter of the business and our accelerated growth ambitions and margin expansion is the best way to run the organization. We want to continue to have very focused category teams that understand the consumer, innovate, manage the category separately. we want to continue to have very focused category teams that understand the consumer innovate manage the category separately But also, we see an opportunity to build the future together in a different way. but also we see an opportunity to build the future together in a different way So if you think about infrastructure, if you think about technology investments, if you think about a lot of the big decisions that we have to make for the future of the business, we have an opportunity to do that in a much more harmonized way in the U.S. so if you think about infrastructure if you think about technology investments if you think about a lot of the big decisions that we have to make for the future of the business we have an opportunity to do that in a much more harmonized way in the u.s So those are the three big ideas that I think for the next chapter of the business and our accelerated growth ambitions and margin expansion is the best way to run the organization. so those are the three big ideas that i think for the next chapter of the business and our accelerated growth ambitions and margin expansion is the best way to run the organization

Speaker 19: Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Dara Mohsenian with Morgan Stanley. our next question comes from dara mohsenian with morgan stanley Your line is open. your line is open

Speaker 7: Hey, good morning, guys. Hey, good morning, guys. hey good morning guys

Speaker 2: Good morning, there. Good morning, there. good morning there

Speaker 7: So just looking at Q4 results for you guys across the CPG industry, clearly a pretty muted top-line growth environment in North America. I know you touched on Frito-Lay North America already, but I'd just love to get a bit more granular on how you're specifically managing the business differently in 2025 relative to the back half of last year on both the Frito-Lay and beverage side of the business and areas you're emphasizing more, such as innovation, etc., and just sort of the tweaks in strategy in light of that sustained environment. And also, just can you give us a quick update on performance in Mexico in Q4, somewhat tied into the same vein of a subdued consumer environment? So any update there would be helpful. Thanks. So just looking at Q4 results for you guys across the CPG industry, clearly a pretty muted top-line growth environment in North America. so just looking at q4 results for you guys across the cpg industry clearly a pretty muted top-line growth environment in north america I know you touched on Frito-Lay North America already, but I'd just love to get a bit more granular on how you're specifically managing the business differently in 2025 relative to the back half of last year on both the Frito-Lay and beverage side of the business and areas you're emphasizing more, such as innovation, etc., and just sort of the tweaks in strategy in light of that sustained environment. i know you touched on frito-lay north america already but i'd just love to get a bit more granular on how you're specifically managing the business differently in 2025 relative to the back half of last year on both the frito-lay and beverage side of the business and areas you're emphasizing more such as innovation etc and just sort of the tweaks in strategy in light of that sustained environment And also, just can you give us a quick update on performance in Mexico in Q4, somewhat tied into the same vein of a subdued consumer environment? and also just can you give us a quick update on performance in mexico in q4 somewhat tied into the same vein of a subdued consumer environment So any update there would be helpful. so any update there would be helpful Thanks. thanks

Speaker 2: Thank you, Dara. So let me start from the international business remains by far our largest growth opportunity, and we've been investing consistently over the last 10 years. We'll continue to invest to continue to nurture this big opportunity for us to develop our caps and continue to build scale business with high margins. To give you a sense, today, our international business is already almost a $40 billion business, attributed to PepsiCo. So we build the scale, we build the leverage, and that business continues to grow at a very good pace. Now, in North America, we're encouraged by what we're seeing. We're encouraged by, in the beverage business, a continuous improvement of our margin, and that was something that we put as a key objective a few years ago. We see our line of sight to a mid-teens margin in our beverage business. Thank you, Dara. thank you dara So let me start from the international business remains by far our largest growth opportunity, and we've been investing consistently over the last 10 years. so let me start from the international business remains by far our largest growth opportunity and we've been investing consistently over the last 10 years We'll continue to invest to continue to nurture this big opportunity for us to develop our caps and continue to build scale business with high margins. we'll continue to invest to continue to nurture this big opportunity for us to develop our caps and continue to build scale business with high margins To give you a sense, today, our international business is already almost a $40 billion business, attributed to PepsiCo. to give you a sense today our international business is already almost a $40 billion business attributed to pepsico So we build the scale, we build the leverage, and that business continues to grow at a very good pace. so we build the scale we build the leverage and that business continues to grow at a very good pace Now, in North America, we're encouraged by what we're seeing. now in north america we're encouraged by what we're seeing We're encouraged by, in the beverage business, a continuous improvement of our margin, and that was something that we put as a key objective a few years ago. we're encouraged by in the beverage business a continuous improvement of our margin and that was something that we put as a key objective a few years ago We see our line of sight to a mid-teens margin in our beverage business. we see our line of sight to a mid-teens margin in our beverage business That continues to be an aspiration. Now, I think we have an opportunity to do better on the top line in beverages, and that is the focus for this year: continue to expand the margin, but drive acceleration on the top line behind better price pack, a much more focused innovation against zero, against functional hydration, against some of the more the categories where we are leaders like teas and coffees. And we continue to improve our operational excellence in beverages. So that's the beverage journey, beverage ambition. Again, productivity at the center. I think the teams have been doing a great job in improving operational efficiency across buying, across making, across moving, and everything else. So that's the journey on beverages. In snacks, after five years of very fast growth and gaining almost 200 basis points of share, 2024 has been a slowdown. That continues to be an aspiration. that continues to be an aspiration Now, I think we have an opportunity to do better on the top line in beverages, and that is the focus for this year: continue to expand the margin, but drive acceleration on the top line behind better price pack, a much more focused innovation against zero, against functional hydration, against some of the more the categories where we are leaders like teas and coffees. now i think we have an opportunity to do better on the top line in beverages and that is the focus for this year continue to expand the margin but drive acceleration on the top line behind better price pack a much more focused innovation against zero against functional hydration against some of the more the categories where we are leaders like teas and coffees And we continue to improve our operational excellence in beverages. and we continue to improve our operational excellence in beverages So that's the beverage journey, beverage ambition. so that's the beverage journey beverage ambition Again, productivity at the center. again productivity at the center I think the teams have been doing a great job in improving operational efficiency across buying, across making, across moving, and everything else. i think the teams have been doing a great job in improving operational efficiency across buying across making across moving and everything else So that's the journey on beverages. so that's the journey on beverages In snacks, after five years of very fast growth and gaining almost 200 basis points of share, 2024 has been a slowdown. in snacks after five years of very fast growth and gaining almost 200 basis points of share 2024 has been a slowdown Our number one priority this year has been stabilizing the category, making sure that consumers come back to the category with good ROI investments. I think we can say that we see that happening. We're seeing the category starting to grow again on volume in the last three months and a little bit of pricing in the category. Frito has a very strong program for 2025, much better price point execution and partitions, as I said earlier in the call, much better innovation. Our number one priority this year has been stabilizing the category, making sure that consumers come back to the category with good ROI investments. our number one priority this year has been stabilizing the category making sure that consumers come back to the category with good roi investments I think we can say that we see that happening. i think we can say that we see that happening We're seeing the category starting to grow again on volume in the last three months and a little bit of pricing in the category. we're seeing the category starting to grow again on volume in the last three months and a little bit of pricing in the category Frito has a very strong program for 2025, much better price point execution and partitions, as I said earlier in the call, much better innovation. frito has a very strong program for 2025 much better price point execution and partitions as i said earlier in the call much better innovation We're moving more of our A&M dollars towards what we call positive choices or permissible offerings for the consumer, a new line of no artificials under Simply, which will have all our brands, more effort on baked, more effort on lightly salted, more efforts on parts of the portfolio where we see consumers moving, a lot of effort on portion control, a lot of effort on single-serve, on multi-packs, and a lot of efforts on availability of our small portions. And then, as I said earlier, away from home continues to be an investment area for Frito, something that was in our strategy. Now we're dialing up the opportunity to have our products available away from home, but not only in the form of a conventional bag of our snacks, but also more elevated experiences in form of ready-to-eat almost solutions or mini-meal solutions. W e're moving more of our A&M dollars towards what we call positive choices or permissible offerings for the consumer, a new line of no artificials under Simply, which will have all our brands, more effort on baked, more effort on lightly salted, more efforts on parts of the portfolio where we see consumers moving, a lot of effort on portion control, a lot of effort on single-serve, on multi-packs, and a lot of efforts on availability of our small portions. w e're moving more of our a&m dollars towards what we call positive choices or permissible offerings for the consumer a new line of no artificials under simply which will have all our brands more effort on baked more effort on lightly salted more efforts on parts of the portfolio where we see consumers moving a lot of effort on portion control a lot of effort on single-serve on multi-packs and a lot of efforts on availability of our small portions And then, as I said earlier, away from home continues to be an investment area for Frito, something that was in our strategy. and then as i said earlier away from home continues to be an investment area for frito something that was in our strategy Now we're dialing up the opportunity to have our products available away from home, but not only in the form of a conventional bag of our snacks, but also more elevated experiences in form of ready-to-eat almost solutions or mini-meal solutions. now we're dialing up the opportunity to have our products available away from home but not only in the form of a conventional bag of our snacks but also more elevated experiences in form of ready-to-eat almost solutions or mini-meal solutions That's why the acquisitions of Siete and Sabra feed our strategy as they give us not only better-for-you snacks, but also the option to participate in meals and mini-meals in a much more intentional way. So those are the kind of the broad strategies. We'll talk more at CAGNY and how we're thinking about all these for the coming years. That's why the acquisitions of Siete and Sabra feed our strategy as they give us not only better-for-you snacks, but also the option to participate in meals and mini-meals in a much more intentional way. that's why the acquisitions of siete and sabra feed our strategy as they give us not only better-for-you snacks but also the option to participate in meals and mini-meals in a much more intentional way So those are the kind of the broad strategies. so those are the kind of the broad strategies We'll talk more at CAGNY and how we're thinking about all these for the coming years. we'll talk more at cagny and how we're thinking about all these for the coming years

Speaker 19: Thank you. One moment for our next question. Our next question comes from, sorry, Bryan Spillane with Bank of America. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from, sorry, Bryan Spillane with Bank of America. our next question comes from sorry bryan spillane with bank of america Your line is open. your line is open

Speaker 11: Hey, thanks, operator. Good morning, everyone. Hey, Ramon. I'd like to pick up on the comments from the previous question related to Frito and, I guess, the focus on some of the more positive choices. And I guess as we step back, right, and we've all been trying to understand both the Frito share and the category, how much of it is just simply price got ahead of the consumer's wallet? How much of this is now a change in preference, right? Is healthier a more important objective from here? And then I guess the last is just where Frito kind of fits in mini-meals because meals have become more expensive. And is there a migration to, I don't know, a dollar menu relative to a bag of Lay's and a Pepsi? So against those three things, which one is the most important? Hey, thanks, operator. hey thanks operator Good morning, everyone. good morning everyone Hey, Ramon. hey ramon I'd like to pick up on the comments from the previous question related to Frito and, I guess, the focus on some of the more positive choices. i'd like to pick up on the comments from the previous question related to frito and i guess the focus on some of the more positive choices And I guess as we step back, right, and we've all been trying to understand both the Frito share and the category, how much of it is just simply price got ahead of the consumer's wallet? and i guess as we step back right and we've all been trying to understand both the frito share and the category how much of it is just simply price got ahead of the consumer's wallet How much of this is now a change in preference, right? how much of this is now a change in preference right Is healthier a more important objective from here? is healthier a more important objective from here And then I guess the last is just where Frito kind of fits in mini-meals because meals have become more expensive. and then i guess the last is just where frito kind of fits in mini-meals because meals have become more expensive And is there a migration to, I don't know, a dollar menu relative to a bag of Lay's and a Pepsi? and is there a migration to i don't know a dollar menu relative to a bag of lay's and a pepsi So against those three things, which one is the most important? so against those three things which one is the most important Specifically, is there something that you're hearing from consumers that is causing a refocus on the more positive choices? Specifically, is there something that you're hearing from consumers that is causing a refocus on the more positive choices? specifically is there something that you're hearing from consumers that is causing a refocus on the more positive choices

Speaker 2: It's a great question. It's actually probably the most strategic question. I think when we talk to consumers, value is the number one decision maker, and it's the reason why the category is slowed down in the last 12 months. So we think that addressing value, giving the consumers choices at different price points, different solutions throughout the month, the consumers will be making choices as they're trying to maximize their disposable income. So I think that continues to be the number one focus, and I think we have a much stronger pricing, sizing, and promotional activities that address that with high ROI and maximizing the value of the category. I think there is more awareness from consumers to the food and the drinks that they consume. I think this has been a multi-year evolution of the consumer in the U.S., globally, obviously, as well. It's a great question. it's a great question It's actually probably the most strategic question. it's actually probably the most strategic question I think when we talk to consumers, value is the number one decision maker, and it's the reason why the category is slowed down in the last 12 months. i think when we talk to consumers value is the number one decision maker and it's the reason why the category is slowed down in the last 12 months So we think that addressing value, giving the consumers choices at different price points, different solutions throughout the month, the consumers will be making choices as they're trying to maximize their disposable income. so we think that addressing value giving the consumers choices at different price points different solutions throughout the month the consumers will be making choices as they're trying to maximize their disposable income So I think that continues to be the number one focus, and I think we have a much stronger pricing, sizing, and promotional activities that address that with high ROI and maximizing the value of the category. so i think that continues to be the number one focus and i think we have a much stronger pricing sizing and promotional activities that address that with high roi and maximizing the value of the category I think there is more awareness from consumers to the food and the drinks that they consume. i think there is more awareness from consumers to the food and the drinks that they consume I think this has been a multi-year evolution of the consumer in the U.S., globally, obviously, as well. i think this has been a multi-year evolution of the consumer in the u.s globally obviously as well Obviously, some parts of the world are more advanced, especially European consumers. But we think there has been more conversations on social and more we've seen some behaviors as well. So that is maybe an acceleration in the US market that we are very well positioned to capture. You think about portion control, probably the number one solution for consumers to stay in our categories is small portions of our favorites, ideally improved favorites with lower sodium and lower fat and no artificial. So portion control of our favorites is a big strategy. There's also consumers that are looking for more functionality, and they're looking for protein in their snacks. They're looking for whole grain in their snacks. They're looking for other benefits, and we're also well positioned. Ob viously, some parts of the world are more advanced, especially European consumers. ob viously some parts of the world are more advanced especially european consumers But we think there has been more conversations on social and more we've seen some behaviors as well. but we think there has been more conversations on social and more we've seen some behaviors as well So that is maybe an acceleration in the US market that we are very well positioned to capture. so that is maybe an acceleration in the us market that we are very well positioned to capture You think about portion control, probably the number one solution for consumers to stay in our categories is small portions of our favorites, ideally improved favorites with lower sodium and lower fat and no artificial. you think about portion control probably the number one solution for consumers to stay in our categories is small portions of our favorites ideally improved favorites with lower sodium and lower fat and no artificial So portion control of our favorites is a big strategy. so portion control of our favorites is a big strategy There's also consumers that are looking for more functionality, and they're looking for protein in their snacks. there's also consumers that are looking for more functionality and they're looking for protein in their snacks They're looking for whole grain in their snacks. they're looking for whole grain in their snacks They're looking for other benefits, and we're also well positioned. they're looking for other benefits and we're also well positioned If you think about Sun Chips and how Sun Chips is innovating with whole grain and now legumes, you think about Stacy's with whole grain. If you think about Quaker with protein snacks, if you think about popping and baking and better air frying, lower fat frying options that we're putting on in front of consumers, those are all tools in our portfolio enabled by very capable R&D that we will continue to expand, and the truth is that our partners have been great partners in expanding space for us in stores and giving us the tools to maximize consumer impact, so that will be big in 2025, and we're pivoting a lot of our A&M into those spaces. The third pillar is mini-meals, and this is not only a value-driven decision, but it's a sequence. If you think about Sun Chips and how Sun Chips is innovating with whole grain and now legumes, you think about Stacy's with whole grain. if you think about sun chips and how sun chips is innovating with whole grain and now legumes you think about stacy's with whole grain If you think about Quaker with protein snacks, if you think about popping and baking and better air frying, lower fat frying options that we're putting on in front of consumers, those are all tools in our portfolio enabled by very capable R&D that we will continue to expand, and the truth is that our partners have been great partners in expanding space for us in stores and giving us the tools to maximize consumer impact, so that will be big in 2025, and we're pivoting a lot of our A&M into those spaces. if you think about quaker with protein snacks if you think about popping and baking and better air frying lower fat frying options that we're putting on in front of consumers those are all tools in our portfolio enabled by very capable r&d that we will continue to expand and the truth is that our partners have been great partners in expanding space for us in stores and giving us the tools to maximize consumer impact so that will be big in 2025 and we're pivoting a lot of our a&m into those spaces The third pillar is mini-meals, and this is not only a value-driven decision, but it's a sequence. the third pillar is mini-meals and this is not only a value-driven decision but it's a sequence It's been also a multi-year evolution of the category where more occasions or more calories are being eaten in small meals versus large meals. And I think that is something that will continue as consumers' lifestyle evolves that way. So there, we're participating with all our brands. We're trying to create solutions for consumers in those moments of the day where they're looking for a 200-calorie, 300-calorie solution that takes them over for the next few hours into their next job or whatever they're trying to accomplish. So those are multi-strategies. Now, the same applies to beverages. Beverages' price points are critical. I think, obviously, offering portions that drive that are critical. Better-for-you, so zero and more functional beverages, and we have both in Gatorade and Propel and in the whole zero portfolio. And then also elevated experiences away from home. And we have Pepsi drafts. It's been also a multi-year evolution of the category where more occasions or more calories are being eaten in small meals versus large meals. it's been also a multi-year evolution of the category where more occasions or more calories are being eaten in small meals versus large meals And I think that is something that will continue as consumers' lifestyle evolves that way. and i think that is something that will continue as consumers' lifestyle evolves that way So there, we're participating with all our brands. so there we're participating with all our brands We're trying to create solutions for consumers in those moments of the day where they're looking for a 200-calorie, 300-calorie solution that takes them over for the next few hours into their next job or whatever they're trying to accomplish. we're trying to create solutions for consumers in those moments of the day where they're looking for a 200-calorie 300-calorie solution that takes them over for the next few hours into their next job or whatever they're trying to accomplish So those are multi-strategies. so those are multi-strategies Now, the same applies to beverages. now the same applies to beverages Beverages' price points are critical. beverages' price points are critical I think, obviously, offering portions that drive that are critical. i think obviously offering portions that drive that are critical Better-for-you, so zero and more functional beverages, and we have both in Gatorade and Propel and in the whole zero portfolio. better-for-you so zero and more functional beverages and we have both in gatorade and propel and in the whole zero portfolio And then also elevated experiences away from home. and then also elevated experiences away from home And we have Pepsi drafts. and we have pepsi drafts That is an elevated experience and multiple other solutions that we have on our away-from-home business. So it is a three-pronged strategy. It is across food and beverages, and we feel good about our ability to continue to give consumers what they need as the preferences evolve, obviously, during the coming years. That is an elevated experience and multiple other solutions that we have on our away-from-home business. that is an elevated experience and multiple other solutions that we have on our away-from-home business So it is a three-pronged strategy. so it is a three-pronged strategy It is across food and beverages, and we feel good about our ability to continue to give consumers what they need as the preferences evolve, obviously, during the coming years. it is across food and beverages and we feel good about our ability to continue to give consumers what they need as the preferences evolve obviously during the coming years

Speaker 19: Thank you. One moment for our next question. Our next question comes from Filippo Falorni with Citi. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Filippo Falorni with Citi. our next question comes from filippo falorni with citi Your line is open. your line is open

Speaker 4: Hi. Good morning, everyone. I want to talk about your low single-digit organic sales guidance for 2025. Can you comment on how much is the international contribution versus the North America expectations? Specifically, in North America, you called out the performance to improve gradually as the year progresses. Can you give us some sense of when you expect North America to improve and kind of what are the key drivers of that improvement in 2025? Thank you. Hi. hi Good morning, everyone. good morning everyone I want to talk about your low single-digit organic sales guidance for 2025. i want to talk about your low single-digit organic sales guidance for 2025 Can you comment on how much is the international contribution versus the North America expectations? can you comment on how much is the international contribution versus the north america expectations Specifically, in North America, you called out the performance to improve gradually as the year progresses. specifically in north america you called out the performance to improve gradually as the year progresses Can you give us some sense of when you expect North America to improve and kind of what are the key drivers of that improvement in 2025? can you give us some sense of when you expect north america to improve and kind of what are the key drivers of that improvement in 2025 Thank you. thank you

Speaker 8: Hi, Filippo. It's Jamie. Yeah. So as we mentioned in the prepared comments, we expect North America's performance to improve gradually as we work through the year. Our guidance of low single digits is in the same neighborhood as our exit rate. Clearly, at this point in the year, with a lot of global uncertainty, I think we've set the top-line guidance to be prudent. And the cause of all the acceleration or the cause of the acceleration in North America is a lot of what Ramon's been sharing previously on the call. So innovation, getting into new spaces, getting into leaning more heavily into away from home. And to be clear, International has been performing very well, and we expect International to continue to be quite resilient and a major contributor to our results in 2025. Hi, Filippo. hi filippo It's Jamie. it's jamie Yeah. yeah So as we mentioned in the prepared comments, we expect North America's performance to improve gradually as we work through the year. so as we mentioned in the prepared comments we expect north america's performance to improve gradually as we work through the year Our guidance of low single digits is in the same neighborhood as our exit rate. our guidance of low single digits is in the same neighborhood as our exit rate Clearly, at this point in the year, with a lot of global uncertainty, I think we've set the top-line guidance to be prudent. clearly at this point in the year with a lot of global uncertainty i think we've set the top-line guidance to be prudent And the cause of all the acceleration or the cause of the acceleration in North America is a lot of what Ramon's been sharing previously on the call. and the cause of all the acceleration or the cause of the acceleration in north america is a lot of what ramon's been sharing previously on the call So innovation, getting into new spaces, getting into leaning more heavily into away from home. so innovation getting into new spaces getting into leaning more heavily into away from home And to be clear, International has been performing very well, and we expect International to continue to be quite resilient and a major contributor to our results in 2025. and to be clear international has been performing very well and we expect international to continue to be quite resilient and a major contributor to our results in 2025

Speaker 19: Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Peter Grom with UBS. our next question comes from peter grom with ubs Your line is open. your line is open

Speaker 12: Thanks, operator. Good morning, everyone. Hope you're doing well. So Ramon, you mentioned in response to Lauren's question that you're kind of encouraged by some of the trends that you're seeing in salty more recently. And I know throughout this call, you kind of touched on a lot of the things that the company is doing to improve performance around affordability, innovation, etc. But just over the past year, category growth has been choppy, and we've seen kind of these periods of growth kind of ultimately reverse. So I just would be curious, as you look at it today, is there something that you're seeing that's different that gives you greater confidence that the category is on much better footing today as you move into the balance of 2025? Thanks. Thanks, operator. thanks operator Good morning, everyone. good morning everyone Hope you're doing well. hope you're doing well So Ramon, you mentioned in response to Lauren's question that you're kind of encouraged by some of the trends that you're seeing in salty more recently. so ramon you mentioned in response to lauren's question that you're kind of encouraged by some of the trends that you're seeing in salty more recently And I know throughout this call, you kind of touched on a lot of the things that the company is doing to improve performance around affordability, innovation, etc. But just over the past year, category growth has been choppy, and we've seen kind of these periods of growth kind of ultimately reverse. and i know throughout this call you kind of touched on a lot of the things that the company is doing to improve performance around affordability innovation etc but just over the past year category growth has been choppy and we've seen kind of these periods of growth kind of ultimately reverse So I just would be curious, as you look at it today, is there something that you're seeing that's different that gives you greater confidence that the category is on much better footing today as you move into the balance of 2025? so i just would be curious as you look at it today is there something that you're seeing that's different that gives you greater confidence that the category is on much better footing today as you move into the balance of 2025 Thanks. thanks

Speaker 2: I think listen, I don't think we can read 2024 in isolation of the previous three years. Otherwise, I think we're missing some of the major impacts on consumer, both lifestyle, move from home into away from home, and disposable income challenges with inflation. So we look at 2024 in the context of the last four years, and we say, "Okay, Frito-Lay, and the category has grown above our long-term expectations." So Frito-Lay grew 8% in the last four years. That's a pretty good compound rate for a company of that scale and that development. So that's positive. And Frito-Lay has, I think, gained almost 200 basis points of share of market. So that is the contextual reality to understand 2024 as a normalization year, inflation going back to normal levels, both on the cost of inputs and the consumer side, and the overall trends in the category. I think listen, I don't think we can read 2024 in isolation of the previous three years. i think listen i don't think we can read 2024 in isolation of the previous three years Otherwise, I think we're missing some of the major impacts on consumer, both lifestyle, move from home into away from home, and disposable income challenges with inflation. otherwise i think we're missing some of the major impacts on consumer both lifestyle move from home into away from home and disposable income challenges with inflation So we look at 2024 in the context of the last four years, and we say, "Okay, Frito-Lay, and the category has grown above our long-term expectations." So Frito-Lay grew 8% in the last four years. so we look at 2024 in the context of the last four years and we say "okay frito-lay and the category has grown above our long-term expectations." so frito-lay grew 8% in the last four years That's a pretty good compound rate for a company of that scale and that development. that's a pretty good compound rate for a company of that scale and that development So that's positive. so that's positive And Frito-Lay has, I think, gained almost 200 basis points of share of market. and frito-lay has i think gained almost 200 basis points of share of market So that is the contextual reality to understand 2024 as a normalization year, inflation going back to normal levels, both on the cost of inputs and the consumer side, and the overall trends in the category. so that is the contextual reality to understand 2024 as a normalization year inflation going back to normal levels both on the cost of inputs and the consumer side and the overall trends in the category Now, yes, we're encouraged by the fact that we're seeing more occasions coming into the category in the last three years of the three months of the year. And that is encouraging because we see consumers coming back to consume our products, consume the products that are being offered by the category. Now, there is a higher level of consumption in the value segments of the category, but it's also more occasions coming in the premium segments of the category, which also helps us to understand the way to address that opportunity, both with good offerings on the value side, but also innovation and good consumer solutions that consumers are willing to pay more on the premium side. And that's why what I said, we're encouraged. Now, yes, we're encouraged by the fact that we're seeing more occasions coming into the category in the last three years of the three months of the year. now yes we're encouraged by the fact that we're seeing more occasions coming into the category in the last three years of the three months of the year And that is encouraging because we see consumers coming back to consume our products, consume the products that are being offered by the category. and that is encouraging because we see consumers coming back to consume our products consume the products that are being offered by the category Now, there is a higher level of consumption in the value segments of the category, but it's also more occasions coming in the premium segments of the category, which also helps us to understand the way to address that opportunity, both with good offerings on the value side, but also innovation and good consumer solutions that consumers are willing to pay more on the premium side. now there is a higher level of consumption in the value segments of the category but it's also more occasions coming in the premium segments of the category which also helps us to understand the way to address that opportunity both with good offerings on the value side but also innovation and good consumer solutions that consumers are willing to pay more on the premium side And that's why what I said, we're encouraged. and that's why what i said we're encouraged I think our commercial plans address the opportunities both ends of the category and also trying to be very cautious and always having ROI at the center of our decisions, not only for PepsiCo, but for the full category, which we think we're guardians of this category for the long term. And that's why we're making some of the decisions we're making. I think our commercial plans address the opportunities both ends of the category and also trying to be very cautious and always having ROI at the center of our decisions, not only for PepsiCo, but for the full category, which we think we're guardians of this category for the long term. i think our commercial plans address the opportunities both ends of the category and also trying to be very cautious and always having roi at the center of our decisions not only for pepsico but for the full category which we think we're guardians of this category for the long term And that's why we're making some of the decisions we're making. and that's why we're making some of the decisions we're making

Speaker 19: Thank you. One moment for our next question. Our next question comes from Steve Powers with Deutsche Bank. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Steve Powers with Deutsche Bank. our next question comes from steve powers with deutsche bank Your line is open. your line is open

Speaker 6: Hey, thanks. Good morning. So I don't want to beat a dead horse, but I just wanted to delve a little further into the topic of Frito investment and specifically the topic of pricing and value because I appreciate the comments you made so far, Ramon, but I guess I'm trying to put a little finer point on it because it's the one area where I guess you could argue you haven't really yet made clear and considered investments, just evidenced by the fact that pricing in Frito is still positive this quarter despite tactical initiatives you discussed coming into the quarter. So the comments you've made today, Ramon, signal a change on that front such that pricing in Frito could potentially start to run negative as we start 2025. Hey, thanks. hey thanks Good morning. good morning So I don't want to beat a dead horse, but I just wanted to delve a little further into the topic of Frito investment and specifically the topic of pricing and value because I appreciate the comments you made so far, Ramon, but I guess I'm trying to put a little finer point on it because it's the one area where I guess you could argue you haven't really yet made clear and considered investments, just evidenced by the fact that pricing in Frito is still positive this quarter despite tactical initiatives you discussed coming into the quarter. so i don't want to beat a dead horse but i just wanted to delve a little further into the topic of frito investment and specifically the topic of pricing and value because i appreciate the comments you made so far ramon but i guess i'm trying to put a little finer point on it because it's the one area where i guess you could argue you haven't really yet made clear and considered investments just evidenced by the fact that pricing in frito is still positive this quarter despite tactical initiatives you discussed coming into the quarter So the comments you've made today, Ramon, signal a change on that front such that pricing in Frito could potentially start to run negative as we start 2025. so the comments you've made today ramon signal a change on that front such that pricing in frito could potentially start to run negative as we start 2025 I certainly understand the risks and sensitivities of walking back pricing, but on the flip side, I guess the question would be, how would you think about the risks of not investing more in price to re-energize volume, just given that it's been, I guess, 18 months or so where we've seen category volumes and volumes in your portfolio extend their declines and fall short of expectations? So just I think I'm hearing a little bit more certain in this, but I just want to. [crosstalk] I certainly understand the risks and sensitivities of walking back pricing, but on the flip side, I guess the question would be, how would you think about the risks of not investing more in price to re-energize volume, just given that it's been, I guess, 18 months or so where we've seen category volumes and volumes in your portfolio extend their declines and fall short of expectations? i certainly understand the risks and sensitivities of walking back pricing but on the flip side i guess the question would be how would you think about the risks of not investing more in price to re-energize volume just given that it's been i guess 18 months or so where we've seen category volumes and volumes in your portfolio extend their declines and fall short of expectations So just I think I'm hearing a little bit more certain in this, but I just want to. [crosstalk] so just i think i'm hearing a little bit more certain in this but i just want to. [crosstalk]

Speaker 2: No, I wouldn't assume that we're going to have negative pricing. I don't think that's our strategy. What I'm saying is we're going to have much more surgical offerings to consumers, especially around price partitions, which I think we can do pricing sizing in a way that we give consumers optionality without diluting the pricing of our business or the category. For example, if you think about the multi-bag business, we will be offering lower counts. We'll be offering eight counts, and we'll be offering 15 counts and 18 counts and 20 counts. We'll be offering the consumer multiple choices so that the consumer can begin of the month, they might go for an 18-count, and end of the month, they might take a six-count, eight-count, depending on their budget availability. That's one strategy. The same with the single-serve. We've always had the two-for-a-dollar option for limited channels. No, I wouldn't assume that we're going to have negative pricing. no i wouldn't assume that we're going to have negative pricing I don't think that's our strategy. i don't think that's our strategy What I'm saying is we're going to have much more surgical offerings to consumers, especially around price partitions, which I think we can do pricing sizing in a way that we give consumers optionality without diluting the pricing of our business or the category. what i'm saying is we're going to have much more surgical offerings to consumers especially around price partitions which i think we can do pricing sizing in a way that we give consumers optionality without diluting the pricing of our business or the category For example, if you think about the multi-bag business, we will be offering lower counts. for example if you think about the multi-bag business we will be offering lower counts We'll be offering eight counts, and we'll be offering 15 counts and 18 counts and 20 counts. we'll be offering eight counts and we'll be offering 15 counts and 18 counts and 20 counts We'll be offering the consumer multiple choices so that the consumer can begin of the month, they might go for an 18-count, and end of the month, they might take a six-count, eight-count, depending on their budget availability. we'll be offering the consumer multiple choices so that the consumer can begin of the month they might go for an 18-count and end of the month they might take a six-count eight-count depending on their budget availability That's one strategy. that's one strategy The same with the single-serve. the same with the single-serve We've always had the two-for-a-dollar option for limited channels. we've always had the two-for-a-dollar option for limited channels Now we're going to have a sub-$2 option that we didn't have. We'll have multiple partitions for different occasions. And obviously, this is the DSD system allows us to have distribution of the different price packs for the occasions that matter for that particular customer or point of sale throughout the year. So those are capabilities that we have in place. Now we would have the offerings. We'll have the executions, and we'll have the partnership with our customers to try to continue to drive value for the consumer and for our partners and for ourselves. I don't think we will have negative pricing. We'll have a much more surgical price pack strategy and execution strategy that we think will drive growth for the category, given where the consumer is in their disposable income evolution after the high inflation years that we just crossed. Now we're going to have a sub-$2 option that we didn't have. now we're going to have a sub-$2 option that we didn't have We'll have multiple partitions for different occasions. we'll have multiple partitions for different occasions And obviously, this is the DSD system allows us to have distribution of the different price packs for the occasions that matter for that particular customer or point of sale throughout the year. and obviously this is the dsd system allows us to have distribution of the different price packs for the occasions that matter for that particular customer or point of sale throughout the year So those are capabilities that we have in place. so those are capabilities that we have in place Now we would have the offerings. now we would have the offerings We'll have the executions, and we'll have the partnership with our customers to try to continue to drive value for the consumer and for our partners and for ourselves. we'll have the executions and we'll have the partnership with our customers to try to continue to drive value for the consumer and for our partners and for ourselves I don't think we will have negative pricing. i don't think we will have negative pricing We'll have a much more surgical price pack strategy and execution strategy that we think will drive growth for the category, given where the consumer is in their disposable income evolution after the high inflation years that we just crossed. we'll have a much more surgical price pack strategy and execution strategy that we think will drive growth for the category given where the consumer is in their disposable income evolution after the high inflation years that we just crossed

Speaker 19: Thank you. One moment for our next question. Our next question comes from Michael Lavery with Piper Sandler. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Michael Lavery with Piper Sandler. our next question comes from michael lavery with piper sandler Your line is open. your line is open

Speaker 3: Thank you. Good morning. Just want to come back to Frito, really not as much the pricing piece, but some of the other spending. At the end of Lauren's question, you were saying you reinvested most of the one-time gains in infrastructure. Just want to maybe understand a little bit better what that is. I mean, I think the optics she pointed out are a little funny, but if we understand that better, I think that's helpful. Just a little bit related, you said that the percentage of sales for advertising and marketing went up in 2024. Can you maybe touch on what your expectations are for 2025 for that? Thank you. thank you Good morning. good morning Just want to come back to Frito, really not as much the pricing piece, but some of the other spending. just want to come back to frito really not as much the pricing piece but some of the other spending At the end of Lauren's question, you were saying you reinvested most of the one-time gains in infrastructure. at the end of lauren's question you were saying you reinvested most of the one-time gains in infrastructure Just want to maybe understand a little bit better what that is. just want to maybe understand a little bit better what that is I mean, I think the optics she pointed out are a little funny, but if we understand that better, I think that's helpful. i mean i think the optics she pointed out are a little funny but if we understand that better i think that's helpful Just a little bit related, you said that the percentage of sales for advertising and marketing went up in 2024. just a little bit related you said that the percentage of sales for advertising and marketing went up in 2024 Can you maybe touch on what your expectations are for 2025 for that? can you maybe touch on what your expectations are for 2025 for that

Speaker 2: I'll start with the A&M. I'd expect our A&M to be pretty consistent as percent of sales in 2025. I'll start with the A&M. i'll start with the a&m I'd expect our A&M to be pretty consistent as percent of sales in 2025. i'd expect our a&m to be pretty consistent as percent of sales in 2025 Investments and how we reinvested them. Investments and how we reinvested them. investments and how we reinvested them I think going back to the investments, I think we continue to think about our long-term portfolio evolution. So continue to invest more on the future platforms that we're trying to create, whether it's portion-controlled platforms, whether it's permissible platforms, whether it's away-from-home platforms. All of those require investments upfront, especially away-from-home requires some investments to be able to capture new channels and new opportunities. The same with some of the new platforms that we have to invest to get it off the ground. That's why my comment on Q4 investing on those platforms. But again, we're trying to run the business for the long term, trying to establish good options for the consumer in all the different price partitions, move the portfolio to where we think are the new pockets of demand. I think going back to the investments, I think we continue to think about our long-term portfolio evolution. i think going back to the investments i think we continue to think about our long-term portfolio evolution So continue to invest more on the future platforms that we're trying to create, whether it's portion-controlled platforms, whether it's permissible platforms, whether it's away-from-home platforms. so continue to invest more on the future platforms that we're trying to create whether it's portion-controlled platforms whether it's permissible platforms whether it's away-from-home platforms All of those require investments upfront, especially away-from-home requires some investments to be able to capture new channels and new opportunities. all of those require investments upfront especially away-from-home requires some investments to be able to capture new channels and new opportunities The same with some of the new platforms that we have to invest to get it off the ground. the same with some of the new platforms that we have to invest to get it off the ground That's why my comment on Q4 investing on those platforms. that's why my comment on q4 investing on those platforms But again, we're trying to run the business for the long term, trying to establish good options for the consumer in all the different price partitions, move the portfolio to where we think are the new pockets of demand. but again we're trying to run the business for the long term trying to establish good options for the consumer in all the different price partitions move the portfolio to where we think are the new pockets of demand Again, lower fat products, lower sodium products, better ingredients, now legumes and rice and some other ingredients, giving consumers higher protein, all the different functionalities that consumers are looking for as they enjoy tasting snacks, and then again, the away-from-home opportunity being much bigger, both with mini meals and some ready-to-eat solutions that our brands can participate. We're seeing high demand and that will require investments to be able to capture for the long term. Again, lower fat products, lower sodium products, better ingredients, now legumes and rice and some other ingredients, giving consumers higher protein, all the different functionalities that consumers are looking for as they enjoy tasting snacks, and then again, the away-from-home opportunity being much bigger, both with mini meals and some ready-to-eat solutions that our brands can participate. again lower fat products lower sodium products better ingredients now legumes and rice and some other ingredients giving consumers higher protein all the different functionalities that consumers are looking for as they enjoy tasting snacks and then again the away-from-home opportunity being much bigger both with mini meals and some ready-to-eat solutions that our brands can participate We're seeing high demand and that will require investments to be able to capture for the long term. we're seeing high demand and that will require investments to be able to capture for the long term

Speaker 19: Thank you. One moment for our next question. Our next question comes from Drew Levine with JPMorgan. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Drew Levine with JPMorgan. our next question comes from drew levine with jpmorgan Your line is open. your line is open

Speaker 10: Can you hear me? C an you hear me? c an you hear me

Speaker 2: Yes. Hi, Drew. Yes. yes Hi, Drew. hi drew

Speaker 10: Thanks for taking the question. So, I think this is the Q1 in a while where energy wasn't specifically mentioned in the prepared remarks. So, wondering any change in view of the category or PepsiCo's platform in the category. And, I know the company has previously said you feel good about the service levels and execution, but maybe any color on what the company has planned from a planning or execution perspective to drive growth in that part of the portfolio or if there's anything that the partnership could be doing differently or better from your perspective. Thank you. Thanks for taking the question. thanks for taking the question So, I think this is the Q1 in a while where energy wasn't specifically mentioned in the prepared remarks. so i think this is the q1 in a while where energy wasn't specifically mentioned in the prepared remarks So, wondering any change in view of the category or PepsiCo's platform in the category. so wondering any change in view of the category or pepsico's platform in the category And, I know the company has previously said you feel good about the service levels and execution, but maybe any color on what the company has planned from a planning or execution perspective to drive growth in that part of the portfolio or if there's anything that the partnership could be doing differently or better from your perspective. and i know the company has previously said you feel good about the service levels and execution but maybe any color on what the company has planned from a planning or execution perspective to drive growth in that part of the portfolio or if there's anything that the partnership could be doing differently or better from your perspective Thank you. thank you

Speaker 2: Thank you. We think we continue to see energy as a fundamental part of our beverage growth strategy in the U.S. There's a demand for energy throughout the day, and I think we have a portfolio that offers that both with our brands and some of the brands that we distribute, and we're servicing our consumers and our customers with, I think, full end-to-end solutions, so there's no mention because there's nothing special to mention. T hank you. t hank you We think we continue to see energy as a fundamental part of our beverage growth strategy in the U.S. we think we continue to see energy as a fundamental part of our beverage growth strategy in the u.s There's a demand for energy throughout the day, and I think we have a portfolio that offers that both with our brands and some of the brands that we distribute, and we're servicing our consumers and our customers with, I think, full end-to-end solutions, so there's no mention because there's nothing special to mention. there's a demand for energy throughout the day and i think we have a portfolio that offers that both with our brands and some of the brands that we distribute and we're servicing our consumers and our customers with i think full end-to-end solutions so there's no mention because there's nothing special to mention

Speaker 19: Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Robert Ottenstein with Evercore ISI. our next question comes from robert ottenstein with evercore isi Your line is open. your line is open Hey, guys. This is Greg on for Robert. I was just wondering if you could please talk a bit about the PB&A pricing strategy for 2025 and then a bit more about higher thinking of promo in that segment. And then as a quick other follow-up, maybe just touch on the incrementality of Baja Blast and just how you guys are thinking about the Mountain Dew franchise. Thank you. Hey, guys. hey guys This is Greg on for Robert. this is greg on for robert I was just wondering if you could please talk a bit about the PB&A pricing strategy for 2025 and then a bit more about higher thinking of promo in that segment. i was just wondering if you could please talk a bit about the pb&a pricing strategy for 2025 and then a bit more about higher thinking of promo in that segment And then as a quick other follow-up, maybe just touch on the incrementality of Baja Blast and just how you guys are thinking about the Mountain Dew franchise. and then as a quick other follow-up maybe just touch on the incrementality of baja blast and just how you guys are thinking about the mountain dew franchise Thank you. thank you

Speaker 2: Great. So listen, Baja Blast is a big part of our strategy to make Mountain Dew a bigger contributor to our growth in beverages. It's a large franchise. It's almost $1 billion already between our away-from-home and our retail business, so in the neighborhood of $1 billion. We see it is incremental in driving penetration for Mountain Dew, especially with Gen Zs and especially in parts of the country where our core Mountain Dew is less developed. So we see a very good incrementality for us, and we will continue to invest in Baja Blast. It's one of our bets for the year. It's continuing the development of Baja Blast. We'll have it for Super Bowl, and there's a whole program throughout the year to continue to develop this platform. I think it's sustainable. It's incremental. It brings new consumers into the franchise. So that's regarding Baja Blast. Great. great So listen, Baja Blast is a big part of our strategy to make Mountain Dew a bigger contributor to our growth in beverages. so listen baja blast is a big part of our strategy to make mountain dew a bigger contributor to our growth in beverages It's a large franchise. it's a large franchise It's almost $1 billion already between our away-from-home and our retail business, so in the neighborhood of $1 billion. it's almost $1 billion already between our away-from-home and our retail business so in the neighborhood of $1 billion We see it is incremental in driving penetration for Mountain Dew, especially with Gen Zs and especially in parts of the country where our core Mountain Dew is less developed. we see it is incremental in driving penetration for mountain dew especially with gen zs and especially in parts of the country where our core mountain dew is less developed So we see a very good incrementality for us, and we will continue to invest in Baja Blast. so we see a very good incrementality for us and we will continue to invest in baja blast It's one of our bets for the year. it's one of our bets for the year It's continuing the development of Baja Blast. it's continuing the development of baja blast We'll have it for Super Bowl, and there's a whole program throughout the year to continue to develop this platform. we'll have it for super bowl and there's a whole program throughout the year to continue to develop this platform I think it's sustainable. i think it's sustainable It's incremental. it's incremental It brings new consumers into the franchise. it brings new consumers into the franchise So that's regarding Baja Blast. so that's regarding baja blast Regarding the pricing strategy, I think there's very disciplined category pricing, both through price pack and through a channel mix. And we'll continue to work on that direction to create value for our partners and for our consumers, giving them the best choices in price packs and promotional offers that create category value and category profitability for our partners and ourselves. Regarding the pricing strategy, I think there's very disciplined category pricing, both through price pack and through a channel mix. regarding the pricing strategy i think there's very disciplined category pricing both through price pack and through a channel mix And we'll continue to work on that direction to create value for our partners and for our consumers, giving them the best choices in price packs and promotional offers that create category value and category profitability for our partners and ourselves. and we'll continue to work on that direction to create value for our partners and for our consumers giving them the best choices in price packs and promotional offers that create category value and category profitability for our partners and ourselves

Speaker 19: Thank you. One moment for our next question. Our next question comes from Robert Moskow with TD Cowen. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Robert Moskow with TD Cowen. our next question comes from robert moskow with td cowen Your line is open. your line is open

Speaker 14: Hi. Thank you for the question. I was curious when you went through the list of factors impacting the slowdown in salty snacks, there's no mention of increased GLP usage. And there's a pretty detailed study by Numerator Cornell showing that salty snacks was a category that was probably most impacted by GLP usage. Would you agree with that assessment, or do you think it overstates the impact? And then secondly, protein drinks is probably the fastest-growing segment of the drinks market. Would you have any desire to go become more aggressive in that category given all the growth around it? Thanks. Hi. hi Thank you for the question. thank you for the question I was curious when you went through the list of factors impacting the slowdown in salty snacks, there's no mention of increased GLP usage. i was curious when you went through the list of factors impacting the slowdown in salty snacks there's no mention of increased glp usage And there's a pretty detailed study by Numerator Cornell showing that salty snacks was a category that was probably most impacted by GLP usage. and there's a pretty detailed study by numerator cornell showing that salty snacks was a category that was probably most impacted by glp usage Would you agree with that assessment, or do you think it overstates the impact? would you agree with that assessment or do you think it overstates the impact And then secondly, protein drinks is probably the fastest-growing segment of the drinks market. and then secondly protein drinks is probably the fastest-growing segment of the drinks market Would you have any desire to go become more aggressive in that category given all the growth around it? would you have any desire to go become more aggressive in that category given all the growth around it Thanks. thanks

Speaker 2: That's great. Listen, on the protein beverages, for sure, we're trying to participate in that with a sense of urgency. We're trying to participate in general in the functionality evolution of the beverage category, both from the functional hydration point of view and there with Gatorade and Propel, and we see the opportunity to continue to create more value, both in terms of hydration by hydration plus protein as well in that space, but yes, in terms of protein, both through Muscle Milk and some other innovations, we're looking at participating in that category, which, as you were saying, it is growing faster than total LRB. So for sure, that is an opportunity that we're. Now, on salty, listen, I think we continue to study GLP, obviously, with a lot of detail. That's great. that's great Listen, on the protein beverages, for sure, we're trying to participate in that with a sense of urgency. listen on the protein beverages for sure we're trying to participate in that with a sense of urgency We're trying to participate in general in the functionality evolution of the beverage category, both from the functional hydration point of view and there with Gatorade and Propel, and we see the opportunity to continue to create more value, both in terms of hydration by hydration plus protein as well in that space, but yes, in terms of protein, both through Muscle Milk and some other innovations, we're looking at participating in that category, which, as you were saying, it is growing faster than total LRB. we're trying to participate in general in the functionality evolution of the beverage category both from the functional hydration point of view and there with gatorade and propel and we see the opportunity to continue to create more value both in terms of hydration by hydration plus protein as well in that space but yes in terms of protein both through muscle milk and some other innovations we're looking at participating in that category which as you were saying it is growing faster than total lrb So for sure, that is an opportunity that we're. so for sure that is an opportunity that we're Now, on salty, listen, I think we continue to study GLP, obviously, with a lot of detail. now on salty listen i think we continue to study glp obviously with a lot of detail At this point, we see that because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact in our business and in our category at this point. However, as I said earlier, I think there's a higher level of awareness in general of American consumers towards health and wellness. And this is driven by potentially all the conversation around obesity drugs, but also other conversations that are happening around the space on health and wellness. So I think, yes, there is a health and wellness higher level of awareness by consumers, and that's driving some behaviors that we're addressing through the strategies that I talked earlier, the most important being portion control. At this point, we see that because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact in our business and in our category at this point. at this point we see that because of the lower levels of adoption and people coming in and out of the treatment we see very little impact in our business and in our category at this point However, as I said earlier, I think there's a higher level of awareness in general of American consumers towards health and wellness. however as i said earlier i think there's a higher level of awareness in general of american consumers towards health and wellness And this is driven by potentially all the conversation around obesity drugs, but also other conversations that are happening around the space on health and wellness. and this is driven by potentially all the conversation around obesity drugs but also other conversations that are happening around the space on health and wellness So I think, yes, there is a health and wellness higher level of awareness by consumers, and that's driving some behaviors that we're addressing through the strategies that I talked earlier, the most important being portion control. so i think yes there is a health and wellness higher level of awareness by consumers and that's driving some behaviors that we're addressing through the strategies that i talked earlier the most important being portion control I think portion control is a highly strategic strategy that we've been implementing for many years, but also long-term evolution of our portfolio with lower sodium, lower fat, lower sugar, positive ingredients, plant-based protein, whole grains. All those are kind of strategic adjustments and evolution of our portfolio that we've been making for many years. We're accelerating to be able to offer consumers all different options for the multiple locations that they interact with our category, so again, we haven't seen a direct impact of GLP, but we're seeing more conversation in social media about health and wellness in general, and obviously, that's impacting consumption of foods and consumption of beverages, and we're very well positioned with our broad portfolio to cater to all these new realities, and this is not new. This is something that we've been working on for many, many years. I think portion control is a highly strategic strategy that we've been implementing for many years, but also long-term evolution of our portfolio with lower sodium, lower fat, lower sugar, positive ingredients, plant-based protein, whole grains. i think portion control is a highly strategic strategy that we've been implementing for many years but also long-term evolution of our portfolio with lower sodium lower fat lower sugar positive ingredients plant-based protein whole grains All those are kind of strategic adjustments and evolution of our portfolio that we've been making for many years. all those are kind of strategic adjustments and evolution of our portfolio that we've been making for many years We're accelerating to be able to offer consumers all different options for the multiple locations that they interact with our category, so again, we haven't seen a direct impact of GLP, but we're seeing more conversation in social media about health and wellness in general, and obviously, that's impacting consumption of foods and consumption of beverages, and we're very well positioned with our broad portfolio to cater to all these new realities, and this is not new. we're accelerating to be able to offer consumers all different options for the multiple locations that they interact with our category so again we haven't seen a direct impact of glp but we're seeing more conversation in social media about health and wellness in general and obviously that's impacting consumption of foods and consumption of beverages and we're very well positioned with our broad portfolio to cater to all these new realities and this is not new This is something that we've been working on for many, many years. this is something that we've been working on for many many years This is a sequential evolution of the consumer that both through innovation and through M&A, we've been addressing. I think we have a very broad portfolio. If you think about the acquisitions of Siete or of Sabra, they're in that context, and they give us both the opportunity to innovate, but also to enter new spaces like meals where we needed more platforms to take advantage of them. This is a sequential evolution of the consumer that both through innovation and through M&A, we've been addressing. this is a sequential evolution of the consumer that both through innovation and through m&a we've been addressing I think we have a very broad portfolio. i think we have a very broad portfolio If you think about the acquisitions of Siete or of Sabra, they're in that context, and they give us both the opportunity to innovate, but also to enter new spaces like meals where we needed more platforms to take advantage of them. if you think about the acquisitions of siete or of sabra they're in that context and they give us both the opportunity to innovate but also to enter new spaces like meals where we needed more platforms to take advantage of them

Speaker 8: Just to add, I think the protein opportunity is beyond protein beverages. So if you look at the Quaker today, we've got a number of offerings that are high protein in the breakfast occasion, and I think there's a lot more opportunity to expand that. J ust to add, I think the protein opportunity is beyond protein beverages. j ust to add i think the protein opportunity is beyond protein beverages So if you look at the Quaker today, we've got a number of offerings that are high protein in the breakfast occasion, and I think there's a lot more opportunity to expand that. so if you look at the quaker today we've got a number of offerings that are high protein in the breakfast occasion and i think there's a lot more opportunity to expand that

Speaker 19: Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our next question comes from Chris Carey with Wells Fargo. our next question comes from chris carey with wells fargo Your line is open. your line is open

Speaker 18: Hi. Thank you. So number one, just on Europe, this has been a segment that has actually seen kind of successfully driven an improvement of volume just even as pricing has normalized. What's specific about what's going on in Europe that has allowed you to see that positive balance of delivery over the course of this year? And do you think this performance is sustainable going into next year? And then just connected, I think there was some view that international profit strength could fund some of the investments in North America. Would you continue to have that view given what we're seeing in the currency environment? So just the concept of international still being able to give you that profit lift so as to fund some of the things that you want to do in North America. So thanks for those two. Hi. hi Thank you. thank you So number one, just on Europe, this has been a segment that has actually seen kind of successfully driven an improvement of volume just even as pricing has normalized. so number one just on europe this has been a segment that has actually seen kind of successfully driven an improvement of volume just even as pricing has normalized What's specific about what's going on in Europe that has allowed you to see that positive balance of delivery over the course of this year? what's specific about what's going on in europe that has allowed you to see that positive balance of delivery over the course of this year And do you think this performance is sustainable going into next year? and do you think this performance is sustainable going into next year And then just connected, I think there was some view that international profit strength could fund some of the investments in North America. and then just connected i think there was some view that international profit strength could fund some of the investments in north america Would you continue to have that view given what we're seeing in the currency environment? would you continue to have that view given what we're seeing in the currency environment So just the concept of international still being able to give you that profit lift so as to fund some of the things that you want to do in North America. so just the concept of international still being able to give you that profit lift so as to fund some of the things that you want to do in north america So thanks for those two. so thanks for those two

Speaker 2: Great. So international continues to be our largest value creation opportunity, both in the top line and margin expansion. If you look at the margin expansion of international in the last couple of years, it's very remarkable. And I wouldn't say that international will fund the U.S., but as we manage the company in its totality, obviously, international now is a great source of top line, is a great source of profit, and it gives us flexibility to be much more flexible, I guess, in how we allocate resources and grow the overall business. With regards to Europe, it's just a, I would say, consistent strategy by our teams. Great. great So international continues to be our largest value creation opportunity, both in the top line and margin expansion. so international continues to be our largest value creation opportunity both in the top line and margin expansion If you look at the margin expansion of international in the last couple of years, it's very remarkable. if you look at the margin expansion of international in the last couple of years it's very remarkable And I wouldn't say that international will fund the U.S., but as we manage the company in its totality, obviously, international now is a great source of top line, is a great source of profit, and it gives us flexibility to be much more flexible, I guess, in how we allocate resources and grow the overall business. and i wouldn't say that international will fund the u.s but as we manage the company in its totality obviously international now is a great source of top line is a great source of profit and it gives us flexibility to be much more flexible i guess in how we allocate resources and grow the overall business With regards to Europe, it's just a, I would say, consistent strategy by our teams. with regards to europe it's just a i would say consistent strategy by our teams I think the teams have done a great job in being very balanced in simplifying the business, extracting unnecessary costs from the P&L, and reinvesting those in growth in platforms that have been very good for us long-term, zero sugar beverages, lower sodium and lower fat snacks, and executing better in terms of availability, affordability, and entering new spaces like away from home. So they've been executing very well this strategy of the business, starting, I would say, from a very intentional reduction of cost to reinvest in top line. And in a difficult context like the European markets with large retailers, they've done a great job. And yes, within that, this is sustainable. Within this, we'll continue in this year and coming years. I think the teams have done a great job in being very balanced in simplifying the business, extracting unnecessary costs from the P&L, and reinvesting those in growth in platforms that have been very good for us long-term, zero sugar beverages, lower sodium and lower fat snacks, and executing better in terms of availability, affordability, and entering new spaces like away from home. i think the teams have done a great job in being very balanced in simplifying the business extracting unnecessary costs from the p&l and reinvesting those in growth in platforms that have been very good for us long-term zero sugar beverages lower sodium and lower fat snacks and executing better in terms of availability affordability and entering new spaces like away from home So they've been executing very well this strategy of the business, starting, I would say, from a very intentional reduction of cost to reinvest in top line. so they've been executing very well this strategy of the business starting i would say from a very intentional reduction of cost to reinvest in top line And in a difficult context like the European markets with large retailers, they've done a great job. and in a difficult context like the european markets with large retailers they've done a great job And yes, within that, this is sustainable. and yes within that this is sustainable Within this, we'll continue in this year and coming years. within this we'll continue in this year and coming years The opportunities to grow per caps in Europe are still very large, and we have very good teams in the markets and very good strategies to deploy our capabilities against the market. T he opportunities to grow per caps in Europe are still very large, and we have very good teams in the markets and very good strategies to deploy our capabilities against the market. t he opportunities to grow per caps in europe are still very large and we have very good teams in the markets and very good strategies to deploy our capabilities against the market

Speaker 19: Thank you. One moment for our next question. Our last question comes from Kevin Grundy with BNP Paribas. Your line is open. Thank you. thank you One moment for our next question. one moment for our next question Our last question comes from Kevin Grundy with BNP Paribas. our last question comes from kevin grundy with bnp paribas Your line is open. your line is open

Speaker 9: Great. Thanks. Good morning, everyone. Ramon, I wanted to take a step back here and give you the opportunity to perhaps level set on the company's longer-term organic sales guidance of 4% to 6%. So not asking you to be redundant in any way, but pulling together a lot of themes on the call. It seems like you see issues in the snacks business as more transitory or cyclical as opposed to secular. You sound confident on the strength of the business outside the U.S., but perhaps maybe cautiously optimistic. You have the right plan in place to return snacks to growth. Time will tell. But as we sit here today, can you maybe comment on your level of confidence? These are indeed transitory issues facing the business, and that 4% to 6% is still the right growth rate for your current portfolio on an intermediate-term basis.Thank you. Great. great Thanks. thanks Good morning, everyone. good morning everyone Ramon, I wanted to take a step back here and give you the opportunity to perhaps level set on the company's longer-term organic sales guidance of 4% to 6%. ramon i wanted to take a step back here and give you the opportunity to perhaps level set on the company's longer-term organic sales guidance of 4% to 6% So not asking you to be redundant in any way, but pulling together a lot of themes on the call. so not asking you to be redundant in any way but pulling together a lot of themes on the call It seems like you see issues in the snacks business as more transitory or cyclical as opposed to secular. it seems like you see issues in the snacks business as more transitory or cyclical as opposed to secular You sound confident on the strength of the business outside the U.S., but perhaps maybe cautiously optimistic. you sound confident on the strength of the business outside the u.s but perhaps maybe cautiously optimistic You have the right plan in place to return snacks to growth. you have the right plan in place to return snacks to growth Time will tell. time will tell But as we sit here today, can you maybe comment on your level of confidence? but as we sit here today can you maybe comment on your level of confidence These are indeed transitory issues facing the business, and that 4% to 6% is still the right growth rate for your current portfolio on an intermediate-term basis. these are indeed transitory issues facing the business and that 4% to 6% is still the right growth rate for your current portfolio on an intermediate-term basis Thank you. thank you

Speaker 2: Thank you. Great question. And I think, obviously, we see our long-term growth of the business in those levels, 4%-6%, and we're obviously going to try to go for the upper end of the long-term guidance. Again, very high growth in international. We're very confident that our North America business will accelerate this year. We're very confident in our plans and our long-term. And we see opportunities, especially away from home, as billions of occasions on a daily basis that we need to go and capture with much more intentional products and consumer-facing go-to-market. So those are big opportunities. We remain very committed, and we also remain very committed to translate that growth into a high single-digit EPS. Thank you. thank you Great question. great question And I think, obviously, we see our long-term growth of the business in those levels, 4%-6%, and we're obviously going to try to go for the upper end of the long-term guidance. and i think obviously we see our long-term growth of the business in those levels 4%-6% and we're obviously going to try to go for the upper end of the long-term guidance Again, very high growth in international. again very high growth in international We're very confident that our North America business will accelerate this year. we're very confident that our north america business will accelerate this year We're very confident in our plans and our long-term. we're very confident in our plans and our long-term And we see opportunities, especially away from home, as billions of occasions on a daily basis that we need to go and capture with much more intentional products and consumer-facing go-to-market. and we see opportunities especially away from home as billions of occasions on a daily basis that we need to go and capture with much more intentional products and consumer-facing go-to-market So those are big opportunities. so those are big opportunities We remain very committed, and we also remain very committed to translate that growth into a high single-digit EPS. we remain very committed and we also remain very committed to translate that growth into a high single-digit eps And if you look at our last five years, we've been delivering above our long-term guidance, both in top line and bottom line, and we don't see any reason why we should not continue to deliver at those high levels if you take the next five years in context. So thank you very much. This has been a good conversation, and I really appreciate your questions. Thank you for staying invested in our business. We look forward to the meeting in CAGNY and also hope that you guys enjoy our products during this weekend Super Bowl game. So thank you. And if you look at our last five years, we've been delivering above our long-term guidance, both in top line and bottom line, and we don't see any reason why we should not continue to deliver at those high levels if you take the next five years in context. and if you look at our last five years we've been delivering above our long-term guidance both in top line and bottom line and we don't see any reason why we should not continue to deliver at those high levels if you take the next five years in context So thank you very much. so thank you very much This has been a good conversation, and I really appreciate your questions. this has been a good conversation and i really appreciate your questions Thank you for staying invested in our business. thank you for staying invested in our business We look forward to the meeting in CAGNY and also hope that you guys enjoy our products during this weekend Super Bowl game. we look forward to the meeting in cagny and also hope that you guys enjoy our products during this weekend super bowl game So thank you. so thank you

Speaker 19: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day. Ladies and gentlemen, this does conclude today's presentation. ladies and gentlemen this does conclude today's presentation You may now disconnect and have a wonderful day. you may now disconnect and have a wonderful day